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- Correction to: Trade, Transport Emissions and Multimarket Collusion with
Border Adjustments-
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PubDate: 2023-12-01
- The Effect of Natural Disasters on Hotel Demand, Supply and Labour
Markets: Evidence from the La Palma Volcano Eruption-
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Abstract: Abstract Natural disasters are an important deterrent factor for tourism activities from both supply and demand perspectives. This paper studies the short-term effect of a volcano eruption on hotel demand, supply and hospitality labour in La Palma (Spain), an island economy that is highly dependent on the tourism sector. Based on a monthly panel dataset, we employ seemingly unrelated difference-in-differences (SUR-DiD) to identify the distinct responses of these three outcomes both during and post eruption. We are particularly interested in examining the asymmetry in their elasticities to the shock, which serve as indicators of disaster resilience. Potential spillover effects on nearby islands are also examined. We find that the eruption resulted in significant yet asymmetrical drops in international demand, number of hotels opened, and hospitality workers hired. Our findings inform about the resilience of the tourism industry to natural disasters, offering relevant insights about heterogeneous effects depending on exposure to the event. PubDate: 2023-12-01
- Will Temperature Changes in the Host Country Reduce the Inflow of
International Direct Investment' Micro Evidence from Chinese Listed Companies-
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Abstract: Abstract With the ever-increasing global temperatures, the long-term climate change trend has become an essential part of global investor strategies. Before dealing with the reduction of international direct investment caused by climate change, governments and enterprises should clarify the causal relationship between temperature change and international direct investment, as well as the impact mechanism. This paper empirically examines the impact of host country temperature changes on the probability and scale of international direct investment inflows using data on Chinese enterprises’ foreign direct investment and the temperature of each host country from 2009 to 2019. The results show that a 1% increase in host country temperature decreases the probability of Chinese firms’ FDI inflows by 5.92% and reduces the size of FDI by 2.60%. The host country’s temperature change has a cumulative effect on inhibiting Chinese enterprises’ direct investment. The mechanism analysis shows that high temperatures increase the number of meteorological disasters, causing economic losses and reducing economic growth rates, which in turn inhibit direct investment from China. The negative effect of host country temperature change on firms’ location choice for international investment is more significant in manufacturing, non-state, and low R&D investment firms. PubDate: 2023-12-01
- Stated Preferences with Survey Consequentiality and Outcome Uncertainty: A
Split Sample Discrete Choice Experiment-
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Abstract: Abstract Stated preference studies are often based on the assumptions that proposed outcomes would realize with certainty and respondents believe their survey responses are consequential. This paper uses split sample treatments to test whether survey consequentiality and outcome uncertainty lead to differences in welfare measures, focusing on a discrete choice experiment on improving quality of electricity supply among business enterprises in Tanzania. Our results show that incorporating uncertainty not only affects the preferences for the attribute with uncertainty (duration of power outage) but also for a choice attribute with a precautionary feature (advanced outage notification). While outcome uncertainty and an additional survey script (a formal letter from a state-owned electric utility) to strengthen consequentiality have some influence on preferences and willingness to pay (WTP) estimates for certain attributes, we do not find significant implications on overall welfare estimates. PubDate: 2023-12-01
- Landfill Scarcity and the Cost of Waste Disposal
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Abstract: Abstract This study examines the effect of landfill scarcity on the cost of municipal solid waste (MSW) disposal. We find the evidence that a decrease in the remaining capacity of landfill sites increases the unit cost of waste disposal. We also find that landfill scarcity impacts intermediate disposal costs (the cost of MSW disposal methods other than landfill disposal) more than landfill disposal costs. Based on the results of previous studies that estimated the external costs of landfills, the cost reduction effect of having a landfill site may overwhelm the external costs. Our results demonstrate that having its own landfill site not only provides the final recipient of MSW but also reduces the cost of MSW disposal. The latter type of benefit has been overlooked in previous studies on MSW disposal. PubDate: 2023-12-01
- The Impact of Wind Energy on Air Pollution and Emergency Department Visits
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Abstract: Abstract Using daily variation in wind power generation in the western portion of Texas, we show that the resulting lower fossil fuel generation in the eastern portion of the state leads to air-quality improvements and, subsequently, to fewer emergency department (ED) visits. Spatially, the impact on pollution is widespread, but wind energy reduces ED admission rates more in zip codes closer to coal plants. Using intra-day wind generation and electricity pricing data, we find that more wind generation coming from hours when congestion on the electricity grid is less leads to higher reductions in emissions from east Texas power plants and PM2.5 concentrations and ED admission rates in east Texas. Comparing wind generation effects across low-demand night hours to higher-demand day hours, more NO \(_\text {X}\) and SO \(_2\) is offset by wind from night hours, but the time-dependent effects for PM2.5 concentrations and ED admission rates is much weaker, potentially due to differences in exposure. PubDate: 2023-11-29
- Promotion Incentives and Environmental Regulation: Evidence from China’s
Environmental One-Vote Veto Evaluation Regime-
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Abstract: Abstract This paper applies a difference-in-differences approach to examine the effectiveness of China’s One-Vote Veto environmental regulation regime, which links pollution reduction targets with local officials’ promotion. Using a rich set of data for 286 Chinese cities, we show that the new political incentive induced significant tradeoff between economic growth and environmental protection. The regime shifts significantly reduced industrial SO2 emissions; however, the environmental improvement was limited only to the reduction of the targeted pollutants that are linked to performance evaluation. Firm-level evidence shows that emission reduction was mainly achieved by reducing new polluting production activities, increasing pollution abatement capacity and improving abatement performance. It is also found that compliance with emissions reduction targets indeed increases the promotion chances of local officials. PubDate: 2023-11-25
- External Monitoring and Enforcement and the Success of Collective Property
Rights Regimes-
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Abstract: Abstract In this paper, we analyze how public monitoring and enforcement (M&E) efforts affect the success of a collective property right. We develop a bioeconomic model to generate several theoretical predictions, which we test empirically by assembling and analyzing novel data on public patrolling and fishing activity in the Chilean abalone fishery. Consistent with our model, we find robust evidence that patrolling increases abalone stocks and harvest for nearby fishers’ organizations. In our preferred (conservative) specifications, a 10% increase in patrolling increases stock density by 0.95% and harvest by 1.2%, which translates roughly to an increase in annual revenues of 6770 USD on average within a port captainship jurisdiction. Our work provides new empirical evidence on the determinants of success for collective property rights regimes, revealing the pivotal role that public M&E can play in helping sustain these institutions. PubDate: 2023-11-24
- The Recreational Value of the Baltic Sea Coast: A Spatially Explicit Site
Choice Model Accounting for Environmental Conditions-
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Abstract: Abstract The coast plays a significant recreational role in the nine countries around the Baltic Sea. More than 70% of the population of these countries visit the coast, representing some 80 million recreational visits annually. Understanding the values associated with coastal recreation, and the potential welfare changes resulting from improvements in the state of environmental and infrastructure conditions of the Baltic Sea coast is important for marine environment management in the region. We estimate a spatially explicit travel cost model for Baltic coast recreation to assess the welfare of accessing individual sites, identify recreational hot spots and simulate the welfare changes resulting from improvements in environmental and infrastructure conditions. The total benefits associated with Baltic Sea coast-based recreation amount to 27.5 billion EUR per year with significant variation across sites. Improving water quality and infrastructure boost the recreational value by nearly 6.2 billion EUR, an increase of about a fifth of the existing recreational benefits. PubDate: 2023-11-22
- Leaving Home: Cumulative Climate Shocks and Migration in Sub-Saharan
Africa-
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Abstract: Abstract We combine a multi-country household panel dataset with high-resolution gridded precipitation data to investigate how cumulative climatic shocks affects the decision to leave the households in five sub-Saharan African countries. We find that while the effect of recent adverse weather shocks is on average modest, the cumulative effect of a persistent exposure to droughts over several years leads to a significant increase in the probability for a household member to leave the household. We speculate that this pattern can be indicative of increased migratory flows due to increase in the frequency of extremes. PubDate: 2023-11-22
- Corporate Social Responsibility, Environmental Emissions and
Time-Consistent Taxation-
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Abstract: Abstract We formally model a Cournot duopoly market in which a corporate socially responsible (CSR) firm interacts with a profit-maximizing firm and where the market is regulated with an emission tax. We consider three different kinds of CSR firm behaviors: (i) consumer-friendly; (ii) environmentally-friendly; and (iii) consumer-environmentally friendly. Unlike most theoretical works within this literature, which typically use specific functional forms, we use general structures for the inverse demand function, the cost function, and for emission levels and damage functions. In terms of modeling strategy, we use two game-theoretic approaches: (i) a simultaneous game and (ii) a sequential three-stage ex-post game, in which decisions are time consistent. We found that the optimal emissions taxation rule is modified when considering different CSR motivations. We show that depending upon the CSR motivation and the price elasticity of demand in some cases we can obtain optimal emission tax rates higher, lower, or equal to marginal external emission. Finally, we also found that firms adopting consumer-friendly CSR behavior are more effective in improving the environment compared to environmentally friendly firms. PubDate: 2023-11-17
- Nudging the Food Basket Green: The Effects of Commitment and Badges on the
Carbon Footprint of Food Shopping-
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Abstract: Abstract We use an incentive-compatible experimental online supermarket to test the role of commitment and badges in reducing the carbon footprint of grocery shopping. In the experiment, some participants had the opportunity to voluntarily commit to a low carbon footprint basket before their online grocery shopping; the commitment was forced upon other participants. We also study the impact of an online badge as a soft reward for the achievement of a low carbon footprint basket. Participants from the general population shopped over two weeks, with the experimental stimuli only in week 2; and received their shopping baskets and any unspent budget. Results indicate that requesting a commitment prior to entering the store leads to a reduction in carbon footprint of 9–12%. When the commitment is voluntary, reductions are driven by consumers who accept the commitment. Commitments also reduced the consumption of fats and, for forced commitments, that of salt by 18%. Badges did not significantly impact consumer behaviour. Commitment mechanisms, either forced or voluntary, appear effective in motivating an environmental goal and search for low-carbon options, particularly in those accepting the commitment. PubDate: 2023-11-14
- Willingness-to-Pay for Energy Efficiency: Evidence from the European
Common Market-
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Abstract: Abstract This paper explores the willingness-to-pay for energy efficiency by exploiting variation across products and countries within the EU market for household appliances. Based on scanner data at product-level, I use the hedonic method to estimate implicit prices for energy efficiency and derive implicit discount rates. The paper argues that the implicit price will be underestimated when energy consumption is not only a determinant of operating cost but also is positively associated with other features of a product. The empirical analysis confirms that estimates of the willingness-to-pay are higher when this effect is accounted for in the estimation. This is especially true of product types for which the heterogeneity of usage intensity is low. The results thus indicate that the energy efficiency gap is smaller than found in earlier studies. PubDate: 2023-11-08
- Mosquitoes and Potatoes: How Local Climatic Conditions Impede Development
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Abstract: Abstract The historical diffusion of the potato in the Old World serves as an example of the contribution of technological innovations to socio-economic growth and development (Nunn and Qian in Q J Econ 126(2):593–650, 2011). Climate-related diseases, on the other hand, might offset some of these benefits. Here we examine the long-term impact of malaria on the potato-driven growth of the population and urbanization in the Old World during the 18th and 19th centuries. We exploit local variations in environmental suitability both for potato and for malaria transmission to estimate and compare the impact of potato cultivation on population and urbanization in highly endemic to non-endemic areas at a high level of spatial disaggregation. We show that local climate conditions ideal for malaria transmission counteracted the potential benefits of introducing the potato to the Old World, which are conversely found to be strong and positive in non-endemic regions. These results highlight the interplay between technological change, public health, and development outcomes. PubDate: 2023-11-07
- Protecting Life and Lung: Protected Areas Affect Fine Particulate Matter
and Respiratory Hospitalizations in the Brazilian Amazon Biome-
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Abstract: Abstract There is growing recognition of the connection between ecosystem conservation and human health. For example, protection of tropical forests can affect the spread of infectious diseases, water quality, and dietary diversity, while forest loss can have important consequences for respiratory health due to the use of fire for converting land to alternative uses in many countries. Studies demonstrating links between ecosystems and health often conclude with recommendations to expand policies that protect natural ecosystems. However, there is little empirical evidence on the extent to which conservation policies actually deliver health benefits when they are implemented in real contexts. We estimate the effects of protected areas (PAs), the dominant type of conservation policy, on hospitalizations for respiratory illness in the Brazilian Amazon biome. We find that doubling upwind PAs reduces PM2.5 by 10% and respiratory hospitalizations by 7% in the months of most active biomass burning. Brazil has an extensive network of PAs, but investments in management and enforcement have declined in recent years. Forest fires have increased dramatically over the same period. We estimate that the value of the health benefits exceed current average expenditures on PA management for the 1/3 of PAs with the largest local populations, although not for PAs in more remote locations. Our findings highlight how quantifying the contributions to the wellbeing of local populations can support conservation objectives, even if global environmental benefits are not a high priority for decision makers. PubDate: 2023-11-06
- Nutrition and Climate Policies in the European Union: Friends or
Enemies'-
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Abstract: Abstract The European Union (EU) Green Deal and its Farm to Fork Strategy are intended to promote sustainable food systems to achieve EU climate-neutrality by 2050. The Farm to Fork action plan also foresees the introduction of a harmonized mandatory front-of-pack nutrition labelling scheme in 2023. The EU countries have yet to reach agreement on the nutrition labelling scheme, which will also have environmental impacts. This article raises the question of whether at the European level, countries should seek agreements on both climate mitigation and nutrition policies (full agreement as in the case of the Green Deal) or should negotiate separate climate and nutrition policy agreements (as for the nutritional labelling). To address this question, this paper develops a game-theoretic model with multiple countries where each country implements a climate policy and a nutrition policy. We compare the consequences in terms of total emissions, the level of the nutrition policy and the welfare under different institutional arrangements of a non-cooperative equilibrium, full agreement, and three alternative agreements. Our results show in particular that full agreement always leads to the lowest total emissions at the expense of the level of nutrition policy in some cases. In an extension of our analysis, we show that agreements that include cooperation over nutrition policies do not necessarily imply formation of a larger coalition of signatory countries, even if a nutrition policy has positive or negative impacts on emissions. PubDate: 2023-11-02
- EAERE Award for the Best Paper Published in Environmental and Resource
Economics During 2022-
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PubDate: 2023-09-25
- The Impact of Environmental Regulation on Firms’ Product Quality:
Evidence from Chinese Exporters-
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Abstract: Abstract This paper examines the impact of two wastewater regulations on export product quality in China. Using a difference-in-differences approach and detailed data at the firm-product-country-year level, the study finds that overall product quality improves by 2%. Specifically, the first regulation leads to a 4.8% improvement, while the second regulation, which has stricter standards, results in a 9.3% decline in product quality. However, when aggregating the data at the firm-year level, decomposition analysis suggests that both regulations’ intensive and extensive marginal effects almost equally improve product quality. Mechanistic analyses attribute the positive impact of the first regulation to advanced equipment adoption, innovation enhancement, and changes in firms’ composition and products. Conversely, the negative effect of the second regulation stems from the reduction in the scale of firms producing high-quality products. Moreover, despite higher production costs and reduced labor demand, the first regulation enhances firms’ competitiveness, while the second regulation diminishes their competitiveness. PubDate: 2023-09-02 DOI: 10.1007/s10640-023-00806-1
- Spillover Effects in Irrigated Agriculture from the Groundwater Commons
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Abstract: Abstract This study examines irrigation spillover effects within the groundwater commons of the San Luis Valley in Colorado. We investigate the common pool competition predicted by a theoretical model of crop production through water-use intensity, acreage size choices, and production intensity among irrigators. By specifying Spatial Probit and regular Spatial Durbin Models, we empirically measure not only the effects of these choices on neighbors, but also the effect of other factors that affect water use and cultivation choices at neighboring farming units. For all three response variables, the results show that irrigators consider neighbors’ responses, with the strength of spatial dependency being highest for production intensity. Additionally, there are significant spillover effects from changes in key covariates, demonstrating the inadequacy of estimating direct effects only. For example, a one-foot increase in depth-to-water has both direct and indirect positive effects on water-use intensity, but the indirect effect constitutes over 81% of the total effect. PubDate: 2023-09-01 DOI: 10.1007/s10640-023-00801-6
- Trade, Transport Emissions and Multimarket Collusion with Border
Adjustments-
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Abstract: Abstract We analyze the impact of border adjustment policies on trade, pollution and welfare when firms, located in different countries, sell differentiated products in geographically-separated markets. Transportation of goods not only incurs a cost, but also generates emissions. We compare outcomes under competition and multimarket collusion. Cooperating governments can implement the first-best using appropriate border adjustments regardless of the market structure. When governments set policies non-cooperatively, the border adjustment tariffs exceed the marginal damage from emissions. While it is expected that colluding firms would reduce trade flows relative to competition, trade increases under collusion, resulting in higher welfare. This highlights the possibility of allowing firms to collude and taxing (part of) their profits, which can be redistributed to citizens or used to mitigate the effects of pollution. PubDate: 2023-08-31 DOI: 10.1007/s10640-023-00799-x
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