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The paper develops the concept of "Economic Pathways" (EPs), which characterizes theory-based scenarios for an economy that strives for decarbonization by the middle of the century. The theoretical framework derives closed-form analytical solutions for consumption, innovation, emissions, and population. The EPs differ in the stringency of assumed policies and associated income and emission development. Unlike the well-known "Shared Socioeconomic Pathways", they allow the inclusion of important causalities between the economy and the environment and thereby considerably narrow down the scope of likely future developments. The quantitative part serves to illustrate the long-term consequences of climate policy. I show that deep decarbonization only moderately delays economic development, but requires increasing escalation of the carbon price. The paper argues that the adoption of more stringent climate policies becomes more likely as the phase-out of fossil fuels increases. The "Green Road" is not only feasible but also attractive and realistic. [ABSTRACT FROM AUTHOR]

Migration of U.S. residents across counties impacts energy consumption and, as a result, the environment. This paper leverages county-level migration data, structural energy consumption estimation techniques, and the AP3 environmental damage model to estimate the emissions impact of migration by county over time. Migration is found to have reduced U.S. environmental damage by $213 billion over the period 1991–2019, with average annual environmental benefits of $15 billion in the 1990s but -$2 billion in the 2010s. The paper also finds a significant reduction in the cost of emissions from energy consumption over time. (JEL Q51, Q56, J11, R23, Q48) [ABSTRACT FROM AUTHOR]

This paper explores the spatial spillover effects of water scarcity on local economic activity and examines the role of irrigation in modulating these effects. Utilizing a newly assembled global geospatial data set that combines information on seasonal water availability and economic activity measured by nighttime luminosity, I conduct a spatial econometric analysis at the granular level of 0. 25 ° × 0. 25 ° grid cells worldwide. My results reveal that agricultural water scarcity in rainfed grid cells has negative spatial spillover effects on economic activity, extending up to 300 kilometers away. However, the presence of irrigation infrastructure effectively mitigates both the direct negative impacts and the negative spatial spillover effects of agricultural water scarcity on economic activity. These results suggest that the benefits of certain climate adaptation measures may not be confined locally, but are observable at a larger scale. This paper emphasizes the importance of considering spatial dynamics and irrigation in understanding the effects of water scarcity on economic activity, providing valuable insights for water resource management policies targeted at promoting climate-resilient development. [ABSTRACT FROM AUTHOR]

Contests are widely used as mechanisms to incentivize efforts in various contexts, from research innovation to athletic and employee performance. This paper builds an analytical model and provides empirical evidence to assess the effectiveness of a large-scale, real-world residential energy conservation contest in Vietnam. The model suggests that contests offering multiple prizes and requiring a minimum amount of effort can effectively promote conservation. It also identifies factors that influence the conservation effort, such as the cost of effort, size of prizes, and types of contestants. To empirically estimate the effect of the energy conservation contest, this paper uses a unique confidential dataset of monthly residential electricity usage with over 45 million observations. The results indicate that the contest significantly reduced electricity consumption among contestants, and the effect of the contest could persist for months after its conclusion, leading to an average abatement cost of $27 per ton of CO2 emissions. [ABSTRACT FROM AUTHOR]

Pro-poor policies can have economic benefits, but they may also have environmental costs. This paper examines the impact of China's "E-commerce into Countryside" project (the ECC project), one of the world's largest targeted poverty alleviation strategies, on local air quality. The project covers approximately 100 million poor people. Using a set of difference-in-differences identification strategies, we find that the pro-poor ECC policy has consistently and significantly contributed to local air pollution, despite its role in fighting poverty. The decline in local air quality is primarily caused by the increase in rural enterprises, destruction of vegetation, and traffic pollution resulting from the intention to sell more agricultural products to the city. Pro-poor policymakers face the challenge of balancing poverty reduction with environmental protection during the process of sustainable development. When making policy decisions, it is important to consider local environmental regulations, ecological vulnerability, and potential adaptation strategies in order to weigh economic benefits against environmental costs. [ABSTRACT FROM AUTHOR]

Nearly a decade after the 2015 emissions scandal, Volkswagen has transitioned from marketing deceptive 'clean engine cars' to becoming a major player in the electrification of the automotive industry. Yet, the violation of environmental standards during the scandal resulted in excessive pollutant emissions, posing persistent threats to health and the environment. This paper explores how consumers held Volkswagen accountable for these hazards. Our analysis reveals that the decline in Volkswagen's sales volumes following the scandal was driven by environmentally concerned consumers globally. However, their reaction was short-lived and mainly limited to the models implicated by the U.S. Environmental Protection Agency. Interestingly, we find no evidence of lost sales to competitors. Instead, we document a within-brand or within-group shift in favor of Volkswagen models compliant with environmental regulations. This phenomenon could be one of the contributing factors explaining Volkswagen's resilience in navigating the fallout from the scandal. [ABSTRACT FROM AUTHOR]

This paper examines how different types of eco-innovation activities affect firms' employment patterns. Using a linked employer–employee administrative dataset for the Netherlands we take an individual level task-based approach to differentiate between green and non-green jobs within firms. Our results show that while eco-innovation does not impact overall employment, eco-product innovation does lead to a 19.72% increase in green jobs. The growth in green jobs mainly comes from a compositional shift towards a small yet significant increase in green workers and reduction in non-green workers. Further analysis suggests that firms that voluntarily undertake eco-innovation create more green jobs but also that it is subsidy-driven policies rather than stricter regulations that drives the increase in green employment. [ABSTRACT FROM AUTHOR]

This paper investigates the relationship between climate change and income inequality, recognizing that the economic impacts of climate change are not uniform across different levels of income within and across countries. Using methods from the existing literature on climate and economic growth, we analyze the economic impact of rising temperatures by within-country income decile. Our findings suggest that climate change disproportionately affects the poorer segments of the population within countries, even after accounting for a country's ability to adapt to climate impacts, while richer households suffer lower damages. In the reference scenario without additional climate action (3.6°C warming), we estimate that climate impacts could lead to an increase in the Gini index by up to six percentage points, notably in Sub-Saharan Africa. We project impacts to 2100 through the RICE50+ model and estimate the income elasticity of impacts within countries. Our estimates indicate that climate change damages are regressive, with an income elasticity of damages of 0.6 under our preferred specification. On the other hand, climate benefits are approximately distribution-neutral or slightly progressive. [ABSTRACT FROM AUTHOR]

This paper studies how centralizing environmental administration affects air pollution in China. China launched a reform in 2016 to empower upper-level environmental protection bureaus to administer lower-level bureaus vertically through personnel control. Exploiting a stacked difference-in-differences strategy, we find that the reform significantly reduced air pollution. The effect was stronger in places where pollution was less likely to be affected by spillovers from other provinces, where local governments initially paid less attention to environmental protection, and where there was less economic importance. Further analysis shows that the reform reduced pollution by strengthening the pollution reduction incentives of local environmental officials, increasing the intensity of local environmental inspection, and promoting environmental compliance by polluting firms. [ABSTRACT FROM AUTHOR]

This paper examines the impact of changes in the stringency of environmental regulations on productivity growth. We exploit several data sources, including the OECD Environmental Policy Stringency Index and balance sheet information from ORBIS and iBACH, to test the Porter hypothesis, according to which firms' productivity can benefit from more stringent environmental policies. We estimate the regulatory impact over a five-year horizon using panel local projections. To identify the direction of the effects, we estimate CO 2 equivalent emissions for all firms in our sample using a machine learning algorithm. As suggested by the country-level analysis and confirmed by the firm-level analysis, policy tightening negatively affects productivity growth of high-polluting firms and to a larger extent than that of their low-polluting peers. Hence, we do not find support for the Porter hypothesis in general. However, not all policies have the same impact – non-market based policies are the most detrimental to productivity growth – and not all highly polluting firms are affected in the same way – the negative impact is mitigated for large firms, which may benefit from easier access to finance and greater innovativeness. [ABSTRACT FROM AUTHOR]

This paper offers empirical insights into the trade-off between local air pollution and traffic accidents by exploiting an annual studded tyre ban in Norway. Studded tyres offer superior traction on icy roads, but also contribute to harmful particulate matter pollution. The use of studs is therefore restricted to certain dates which, due to its dependence on Easter, can differ by over a month from one year to another. I exploit this variation in a type of regression discontinuity in time design. The findings suggest that the use of studded tyres does not decrease the number of traffic accidents. Moreover, there is no evidence that studded tyres increase particulate matter pollution. As studded tyres increases road wear and tear and appears to not contribute to road safety, this paper raises the question of whether North-American and European countries where studded tyres are widely used should revisit their traffic safety policies. [ABSTRACT FROM AUTHOR]

This paper examines the causal impact of LEED (Leadership in Energy & Environmental Design) certification on energy consumption among federally owned buildings that were retrofitted over the period 1990–2019. Using a difference-in-differences propensity score matching approach, the paper has two findings. First, despite energy savings being an explicit federal goal, LEED-certified retrofits of federal buildings did not have statistically significant energy savings on average. Second, LEED buildings with higher energy scores had greater energy efficiency post-certification, and the improvements were economically meaningful. The absence of energy savings on average appears to be driven by three factors — trade-offs across energy and other areas in acquiring points for certification, possible changes in energy use after the official performance period for LEED certification ended, and improvements in the energy efficiency of all federal buildings. [ABSTRACT FROM AUTHOR]

This paper exploits the information disclosure and dissemination of environmental punishments on housing prices. As environmental quality is hardly ameliorated in the short run, the environmental punishments normally convey bad news of environmental quality rather than good news to housing market. The information disclosure of environmental punishment adds new pollution source information to the public. Employing the micro databases of firm-level environmental punishments and housing resale transactions in Beijing from January 2015 to December 2017, this research reveals that the transaction prices of houses within 0.5 km distance from the environmentally punished firms decrease by 1.84% on average and the overlapping effects of environmental punishments are fortified by multiple environmental punishments. In addition, the negative effects are amplified in the heating seasons and in the national important events. Unfortunately, we find little evidence of environmental punishments in the rental housing market. This paper identifies three mechanisms of environmental punishments on housing prices. The first mechanism is information disclosure, which proves that the impacts of environmental punishments on housing prices magnify if the information of environmental punishments is released to the public and reinforce with environmental information searching. The second mechanism is information dissemination, which corroborates that the negative effects of environmental punishments on housing transaction prices decay with distance and over time. The third mechanism is health concern arising from environmental punishments, which documents that relative to the unmarried young homebuyers, the older homebuyers and homebuyers with children have stronger responses to the environmental punishments. [ABSTRACT FROM AUTHOR]

The timing of climate adaptation decisions can have substantial consequences for the assessment of climate damages. Since weather variability can create risks for natural resource management that differ across adaptation choices, such variability has the potential to alter the speed of climate adaptation. This paper estimates the effect of weather variability on the timing of adaptation decisions of forest landowners in the Eastern United States. A discrete-choice econometric model of forest management is estimated and used in a bio-economic simulation that shows how variability in cold temperatures can significantly slow the rate of adapting from cold-tolerant natural hardwood forests to cold-sensitive, but highly valuable pine plantations. The range of weather variability in climate projections and across the landscape generates large differences in adaptation timing. Ignoring projected future decreases in weather variability results in a large downward bias in estimating future paths of climate adaptation. Since pine plantations produce fewer non-market ecosystem services than natural hardwood forests, an important source of future conservation uncertainty is the economic response of private forest landowners to changing weather variability. [ABSTRACT FROM AUTHOR]

This paper examines how temperature affects worker productivity beyond the usual "on average" analysis, with a particular focus on distributional impacts of the increasing heat incidence across high- and low-productivity areas. Using a recentered influence function regression approach, we estimate unconditional reduced-form effects of a location shift in the temperature distribution—consistent with climate change trends—on the labor productivity distribution across counties in the contiguous U.S. We find that labor productivity is largely insensitive to changes in the frequency of cool-to-moderate maximum daily temperatures. However, as temperatures shift above 2 4 ∘ C , the effects on productivity turn increasingly negative, albeit with their magnitudes attenuating as a county's productivity rank rises. While highly productive locations in the top 5% are not adversely impacted even by the hottest temperatures, permanently increasing the incidence of ≥ 3 6 ∘ C temperatures just by a day lowers productivity at the bottom vigintile by a nontrivial 0.22% per year, an equivalent of 10.5 hours of work by a minimum-wage worker. As temperatures continue to rise, not only does worker productivity worsen on average, but the cross-county dispersion therein widens too. Given existing climate forecasts, we predict that future extreme temperatures would further deepen worker productivity inequality. [ABSTRACT FROM AUTHOR]

Plastic waste trade has grown considerably in the last decades and has led to severe environmental problems in recipient countries. Being the largest recipient, China has permanently banned the imports of plastic waste since 2018. This paper examines the causal effect of plastic waste imports on air pollution by exploiting China's experience of importing plastic waste and the recent import ban. By combining data on plastic waste imports with PM 2.5 data at the city level for the years 2000–2011, we find that plastic waste imports increased PM 2.5 density significantly in recipient cities. To evaluate the impact of the import ban on air quality, we employ daily data on air pollution between 2015 and 2020. Our difference-in-differences results show that affected cities, relative to other cities, experienced considerable improvement in air quality following the ban. Further analysis reveals that increased incineration of non-recycled waste is the main channel. These findings provide insights into the costs of importing plastic waste and the potential environmental gains from banning such imports in other countries. • We assess the environmental impact of plastic waste trade in the context of China. • Chinese cities that imported more plastic waste experienced an increase in PM2.5 density between 2000 and 2011. • The primary factor contributing to worsened air quality was the increased incineration of non-recycled waste. • China's import ban in 2018 effectively improved air quality. • The findings highlight the importance of designing effective policies to regulate international trade in waste and domestic waste management. [ABSTRACT FROM AUTHOR]

This paper estimates the impact of particulate matter pollutants, measured by P M 10 levels, on public healthcare costs for youth and older adult populations using administrative data from two large UK hospitals and exploiting spatial and temporal variation in P M 10 levels. We find that patient enrolment increases when their neighborhood experiences higher levels of P M 10. Specifically, a standard deviation increase in P M 10 levels increases the enrolment of patients aged 60 years and older by 6.2% and the enrolment of patients under 18 years of age by 3.1%. Using detailed costing information, we estimate that a standard deviation increase in P M 10 increases public healthcare costs by £ 873 , 985. 20 per year in the municipality studied. [ABSTRACT FROM AUTHOR]

Economists tend to view a uniform emissions price as the most cost-effective approach to reducing greenhouse gas emissions. This paper scrutinizes the assumptions in general equilibrium which underlie the established view that uniform emissions pricing is optimal, focusing on economies where society values the well-being of future generations more than private actors. When social and private discount rates differ, we show that a uniform carbon price is optimal only under restrictive assumptions about technology homogeneity and intertemporal decision-making. Non-uniform pricing spurs capital accumulation and benefits future generations. Depending on sectoral heterogeneity in the substitutability between capital and energy inputs, we find that optimal carbon prices differ widely across sectors and yield substantial welfare gains relative to uniform pricing. Realizing these welfare gains, however, requires that the regulator has information on the technology heterogeneity across sectors. Differentiated carbon pricing based on imperfect estimates of technology heterogeneity can yield significant welfare losses. [ABSTRACT FROM AUTHOR]

Hypothetical Bias (HB) remains challenging for practitioners of stated preference approaches. One elusive idea is the extent to which country and culture may affect HB's magnitude and the efficacy of mitigation methods. This paper implements both real and hypothetical elicitation in the United States and China in the context of a field survey and experiment for battery recycling containers to establish the extent of HB. It compares multiple HB mitigation strategies, namely Cheap Talk, Ex Ante Consequentiality, and Certainty Follow-up in the two countries. Results show that a significant amount of actual HB exists. The ex ante methods are ineffective at reducing HB in both countries. The Certainty Follow-up method can be effective but can overcorrect, especially for the Chinese sample. Results also indicate that comparing the efficacy of different mitigation strategies based on only hypothetical scenarios (potential HB) across countries may lead to erroneous conclusions. This study calls for treating country and cultural differences more seriously when conducting international valuation work. [ABSTRACT FROM AUTHOR]

Surface water supplies are becoming increasingly strained, pushing policy makers to find solutions to facilitate reductions in water use though there is limited evidence on how farmers respond to policy induced variation in surface water supplies. This paper uses a difference-in-differences framework to compare the response of farmers to a bundle of policies reducing deliveries from the Colorado River by 35%. I find that on average, farmers reduce the amount of land planted but plant more water intensive crops leading to a minimal reduction in total estimated water use compared to the counterfactual. Additionally, there is strong suggestive evidence that farmers are using groundwater to offset a significant amount of the surface water loss. These findings have important consequences for understanding the relative trade-offs policy makers face when implementing policies that protect surface water sources. [ABSTRACT FROM AUTHOR]

This paper examines the investment incentives of market-based regulation, focusing on the technology characteristics that different regulatory schemes tend to incentivize. The firms' technology choice is socially optimal if and only if the aggregate emission allowance supply is completely inelastic. Furthermore, in the presence of uncertainty, elastic emission allowance supply, and strictly convex environmental damage, it is optimal to tax investments in technologies that induce a large variance in emissions. Lastly, price elastic supply of emission allowances may either increase or decrease the volatility in the product market, depending on the risk environment the firms face. The results indicate that introduction of permit price-stabilizing measures in an emission trading system will come at the cost of suboptimal technology investments, and may also lead to increased fluctuations in product prices. • I examine investment and technology characteristics induced by environmental regulation. • Firms' technology choice is suboptimal unless the cap on emissions is exogenous. • It is optimal to tax investment in technologies that induce large variance in aggregate emissions. • Elastic emission allowance supply can impact product market volatility. [ABSTRACT FROM AUTHOR]

This paper evaluates the bioeconomic performance of individual fishing quota (IFQ) regulations in multiple-species fisheries. In our model, a manager chooses the aggregate quotas under uncertainty over the true stock abundances of two jointly-harvested fish species. Fishers conduct harvest operations under full knowledge of the species-specific productivities of fishing gear. We derive the profit maximizing fishing mortality and economic rent outcomes implemented by fishers under various regulatory designs. We compare bioeconomic performance of an IFQ regulation with discretion over the mix of harvested species against an IFQ regulation that bans at-sea discarding. Both regulations eliminate discards. Discretion allows closer alignment between fisher implemented outcomes and those that maximize long term expected fishery value. Incorporating discretion into regulatory designs provides new prospects for improving fisheries management. [ABSTRACT FROM AUTHOR]

This paper estimates the mortality impacts of ozone pollution in China and the moderating effects of two possible adaptation strategies. Using an instrument variable constructed from ozone concentrations of nearby upwind cities, we find that ozone pollution significantly increases all-cause, cardiovascular, and respiratory mortality. Healthcare service provision significantly decreases the impacts of ozone pollution on all-cause and cardiovascular mortality, but does not moderate the impact on respiratory mortality. The impact of ozone on RES mortality declines after COVID-19. Healthcare service provision also reduces the distributional impact of ozone across the elderly and younger groups. Projection shows that climate change would induce mortality costs of 0.08% of China's GDP through increasing ozone pollution. [ABSTRACT FROM AUTHOR]

This paper estimates flexible demand systems for heterogeneous households in the United States and links the estimated parameters with an economy-wide model to assess their relative contributions to the social cost of regulation. We estimate elasticities for several final demand categories as well as labor-leisure elasticities that are important for calibrating the labor-leisure choice in the economy-wide model and find that estimated elasticities are relatively similar across regions but vary meaningfully by income. Using the estimated elasticities, we explore the implications of both the functional form and its parameterization in a simplified computable general equilibrium model for the social and distributional costs of illustrative policy scenarios. Model variants with less flexible consumer demand systems overestimate social costs across our entire range of scenarios. Furthermore, we find that parameterizing the model with elasticities that vary with household income is important for adequately characterizing the distributional implications of a policy. [ABSTRACT FROM AUTHOR]

Environmentally friendly alternatives (EFA) are touted as a key component of a transition towards lowering the impact of human activity on the environment. Still, the environmental costs of these technologies are seldom null; they are simply less environmentally damaging than existing options. In this paper, we investigate consumer behavior when an EFA is introduced. Using a carefully constructed field experimental design, we look at plastic bags vis-a-vis biodegradable (bio) bags, when the latter are offered for free versus at a price. Moreover, we explore offering costly biodegradable bags as part of the default choice. We find that giving away the bio bags for free results in a large behavioral rebound effect, resulting in a substantial increase in the total number of bags. Setting a small, rather symbolic price offsets this rebound effect completely. Interestingly, when the bio bag is offered as a default, the behavioral rebound remains. Our results lead us to conclude against providing these EFA for free and to caution against the use of subsidies to promote their uptake. [ABSTRACT FROM AUTHOR]

In Bangladesh, cholera poses a significant environmental health risk. Yet, information about the severity of cholera risk is limited as risk varies over time and changing weather patterns make historical cholera risk predictions less reliable. In this paper, we examine how households use geographically and temporally personalized cholera risk predictions to inform their beliefs and behaviors related to cholera and its aversion. We estimate how access to a smartphone application containing monthly cholera risk predictions unique to a user's home location affects households' beliefs about their cholera risk and their water use and hygiene behaviors. We find that households with access to this application feel more equipped to respond to environmental and health risks and reduce their reliance on surface water for bathing and washing – a common cholera transmission pathway. We do not find that households invest additional resources into drinking water treatment, nor do we find reductions in self-reported cholera incidence. Further, households with a static, non-personalized app containing public health information about cholera exhibit similar patterns of beliefs updating. Taken together, our results suggest that access to risk information can help households make safer water choices, yet improving design and credibility remain important dimensions for increasing application usability. • Satellite observations provide improved information for cholera risk. • Households in rural Bangladesh find improved information for cholera risk valuable. • Dynamic, personalized cholera risk information can change household water behaviors. • Households with a cholera early warning system reduce reliance on surface water. • Early warning system design affects sustained application use. [ABSTRACT FROM AUTHOR]

In the game-theoretical literature on forming international environmental agreements (IEAs) countries use to be self-interested materialists and stable coalitions are small. This paper analyzes IEA games with identical countries that exhibit Kantian moral behavior. Kantians are concerned with doing the right thing which means that they take those actions and only those actions that they advocate all others take as well. Countries may behave morally with respect to both emissions (reduction) and membership in an IEA. If countries are emissions Kantians or membership Kantians the equilibrium of the IEA games is socially optimal. To model more realistic Kantian behavior, we define an emissions [membership] moralist as a country whose welfare is a weighted average of the welfare of an emissions [membership] Kantian and a materialist. The game with emissions moralists produces stable coalitions not larger than those in the standard game with materialists. The game with membership moralists yields stable coalitions that are increasing in the membership morality. The aggregate emissions decline if the degree of morality of either type of moralists increases. Finally, we characterize the equilibrium of an IEA game with moderate moralists with respect to both emissions and membership. [ABSTRACT FROM AUTHOR]

This paper addresses econometric challenges arising in panel data analyses related to IPAT (environmental Impact of Population, Affluence and Technology) models and other applications typically characterized by a large- N and large- T structure. This poses specific econometric complexities due to nonstationarity and cross-sectional error correlation, potentially affecting consistent estimation and valid inference. We provide a concise overview of these complications and how to deal with these with appropriate tests and models. Moreover, we apply these insights to empirical examples based on the IPAT identity, offering insights into the robustness of previous findings. Our results suggest that using standard panel techniques can lead to biased estimates, incorrect inference, and invalid model adequacy tests. This can potentially lead to flawed policy conclusions. We provide practical guidance to practitioners for navigating these econometric issues. [ABSTRACT FROM AUTHOR]

This paper analyzes the effects of partial cooperation on the breadth and depth of climate agreements in dynamic games in which countries emit, invest in green technology, decide to participate in a climate coalition and participants negotiate the contract duration. When choosing emissions reductions (pledges), coalition countries apply Harstad's (2023a) pledge-and-review bargaining and partially cooperate. We distinguish between stock-independent and stock-dependent investment costs. It is shown that narrow-but-deep agreements may be welfare superior to broad-but-shallow agreements for signatories. In addition, if the degree of partial cooperation is sufficiently high, broad-and-deep agreements and even first best can be achieved. [ABSTRACT FROM AUTHOR]

Many renewable natural resources have been extracted beyond sustainable levels. While some resource stocks have recovered, others are still over-extracted, causing substantial economic losses. This paper develops a model motivated by empirical facts about resource use and regulation to understand these patterns. The model is a dynamic model of a dual economy with technological progress, structural change, and costly resource regulation. Based on this model, we show that technological progress explains the initial increase in resource use. Technological progress also induces structural change and a decline in resource users. While the declining number of resource users does not directly lead to resource recovery, it does reduce regulatory costs, paving the way for resource regulation and recovery. Our results show that although technological progress can contribute to resource degradation, it also helps resource recovery through reduced regulatory costs. Our results suggest further that a temporal use beyond sustainable levels can be socially optimal until regulatory costs fall below the benefits of regulation. [ABSTRACT FROM AUTHOR]

Using quarterly temperature and employment data between 1990 and 2021, this paper uncovers nuanced evidence on the impact of seasonal temperature within US counties: higher winter temperature increases private sector employment growth while higher summer temperature decreases it. The impacts of higher temperature in milder seasons, fall and spring, are statistically insignificant. Moreover, the negative impact of higher summer temperature persists while the positive impact of higher temperature in the winter is more short-lived. The negative effects of a hotter summer are pervasive and persistent in many sectors: most significantly in "Construction" and "Leisure and Hospitality" but also in "Trade, Transport, and Utilities" and "Financial Activities". In contrast, the positive effects of a warmer winter are less pervasive. The employment effect of a hotter summer has been more severe in recent decades. [ABSTRACT FROM AUTHOR]

Policy interaction is an important way to deal with increasingly complex environmental problems. This paper examines the investment-related tax cuts and the policy interaction with environmental regulation on firms' emission reduction strategies. Taking China's value-added tax (VAT) reform as a quasi-natural experiment and considering the interaction with the emission reduction target policy, our difference-in-differences estimation shows that: the average effect of the VAT reform reduces firms' sulfur dioxide (SO 2) emission intensity by 16.6%, due to the adoption of emissions reduction strategies in the production processes; the interaction effect between the VAT reform and environmental regulation incentivizes firms to additionally reduce SO 2 emission intensity, due to the adoption of both production processes and end-of-pipe reduction strategies. Our findings are more evident for firms with tight financial constraints. Overall, this paper reveals the micro-mechanisms of how the tax policies incentivize firms to choose emission reduction strategies and highlights the importance of the interaction effects between environmental and non-environmental policies, thus providing implications for the policy mix of environmental regulation and tax-cut incentives to promote pollution reduction and improve business performance. [ABSTRACT FROM AUTHOR]

The Emission Trading Scheme (ETS) provides a market mechanism to mitigate carbon emissions and has been introduced in many countries. Its fundamental idea is to make carbon emissions costly. Consequently, firms undertaking cross-border expansions may have to consider this extra cost when entering markets with an ETS. They may avoid these countries or relocate their investment to countries without an ETS. Using a large sample of international firms between 2002 and 2019, we investigate this issue via a difference-in-difference approach. Our results show that ETS implementation leads to significantly less cross-border merger and acquisition (M&A) deals in the host countries, indicating an avoidance effect or potential carbon leakage. Further analysis reveals that ETS implementation decreases firms' financial performance and increases market risks, both contributing to cross-border M&A decisions. We demonstrate strong evidence of cross-sectoral differences, where carbon-intensive sectors tend to bear higher costs. This study contributes to the environmental economics and finance literature and provides evidence with policy relevance. • This paper explores the effects of Emission Trading Schemes on cross-border M&As. • ETS implementation is associated with a significant reduction in cross-border M&As. • The introduction of ETS can lead to lower financial performance of the acquiring firms. • Climate policy can significantly influence firms' strategic investment decisions. [ABSTRACT FROM AUTHOR]

In this paper, we assess the effectiveness of early climate policy in emerging economies by causally evaluating the impact of China's Low-carbon City Pilot (LCCP) on city-level per-capita CO 2 emissions and CO 2 intensity of GDP over the period 2003–2017. The idiosyncrasies of the policy design pose significant challenges for causal identification, which we overcome within a synthetic control framework. Contrary to previous contributions, our results suggest that the LCCP had no significant impact on either carbon emissions or intensity. The main takeaway of our empirical investigation is that even in emerging economies, effective environmental policy requires transparent, quantifiable targets, and credible enforcement. [ABSTRACT FROM AUTHOR]

This paper investigates the impact of the timing of adaptation on the stability of international environmental agreements (IEAs) for different levels of cooperation. This issue is addressed by solving a three-stage coalition formation game in a Nash-Cournot setting. In the first stage, countries decide non-cooperatively on their participation in an IEA. Then, depending on the timing, countries decide on adaptation and emissions in the second and third stage. The game is solved for three levels of cooperation. Countries can either cooperate on emissions (emission agreement), on adaptation (adaptation agreement), or both actions (complete agreement). When emissions are chosen first, this extension to an emission–adaptation game is a generalization of the pure emission game. However, when adaptation is chosen first, the grand coalition is stable, provided that countries sign a complete agreement. With partial cooperation, stable coalitions are small. The results establish a connection between the strategic role of adaptation, the levels of adaptation of non-signatories and signatories for the different types of agreements and the participation in an IEA. Moreover, the results indicate that the grand coalition is stable even when it significantly enhances net benefits. [ABSTRACT FROM AUTHOR]

This paper extends the literature on the potential negative employment effects of environmental policy by bringing to the fore a key factor that directly regulates its magnitude: the elasticity of substitution between labor and energy. Using firm-level data from the French manufacturing sector and addressing endogeneity concerns, we provide empirical estimates that point to strong complementarity between labor and energy. We then investigate the empirical relevance of the elasticity of substitution in studying firms' response to changing energy prices. Our findings suggest that the negative employment effects of rising energy prices are largely driven by firms with limited substitution capacity. [ABSTRACT FROM AUTHOR]

This paper examines the impact of transboundary vegetation fire smoke on the real-time sentiment of Twitter users in Southeast Asia, including countries such as Brunei, Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam. We leverage the exogenous variation in wind directions for identification. We find that an increase in upwind fires by one standard deviation reduces the sentiment score by 0.5 percent of a standard deviation (after netting out the impact of unobserved local socioeconomic factors). During peak fire seasons, our estimate translates into sentiment damages comparable to the average Sunday-to-Monday sentiment drop. The adverse sentiment impact exhibits significant variation across countries and intensifies with factors such as the number of upwind fires, income levels, proximity to fires, and limited adaptability on weekdays. We show that cross-boundary air pollution is the primary channel, with smoke from neighboring countries exerting a greater impact on sentiment than domestically produced smoke. These findings underscore the psychosocial costs and geopolitical tensions associated with cross-border air pollution spillovers. [ABSTRACT FROM AUTHOR]

In this paper, we estimate the consumer impacts of Wisconsin's "phosphorus rule", which created the most stringent statewide water quality and effluent standards for phosphorus in the country. We examine how compliance with the rule affects real billing rates at sewer utilities in Wisconsin, providing the first empirical estimates of water pollution regulation on utility billing rates. We find that compliance with the phosphorous rule increases the average real sewer utility bill in our sample by 7–12%. Our results imply that sewer utilities pass through approximately $65.8 million to residential sewer rate payers annually, which is roughly ⅔ of the total sewer utility compliance costs of the rule. State government subsidies cover an additional ¼ of the sewer utility compliance costs. [ABSTRACT FROM AUTHOR]

There is a lack of evidence regarding how natural resource markets have responded to recent increases in climate-induced extreme events like wildfire. Wildfire can affect the economic value of forests by directly damaging the existing tree stock and by altering landowner risk expectations of future wildfire arrival. This paper uses parcel data over a seventeen-year period to estimate the effects of large wildfires and drought stress on market prices for private timberland across the three Pacific states of the western U.S. In addition to estimating the land price impacts of wildfires on parcels that were directly burned, we identify changes in risk expectations by estimating the impacts from wildfires that burned in close proximity rather than directly on timberland that was sold in the land market. Results indicate that recent increases in large wildfires and drought stress over the past two decades have lowered the economic value of timberland by approximately 10%, or about $11.2 billion in damages across the three Pacific states, with approximately 5.5% (∼$6.2 billion) due to climate change. Most of the wildfire damages arise from changes in risk expectations. Results provide evidence on the costs of climate-induced extreme events on natural capital that have already occurred. • Climate-induced extreme events, such as drought stress and large wildfires, negatively affect the economic value of timberland in the Pacific states. • Wildfires lower timberland values through two avenues: direct damage to the existing forest stock and neighboring fires that alter landowners' expectations of fire arrival. • As a result of recent increases in drought stress and large wildfires, the economic value of timberland has been reduced by approximately 10%, or about $11.2 billion in damages across three Pacific states, with approximately 5.5% (∼$6.2 billion) due to climate change. Most of the wildfire damages arise from changes in risk expectations. [ABSTRACT FROM AUTHOR]

This paper studies the long-term effects of in-utero and early-life exposure to pesticide use on adulthood and old-age longevity. We use the cyclical emergence of cicadas in the eastern half of the United States as a shock that raises the pesticide use among tree crop growing farmlands. We implement a difference-in-difference framework and employ Social Security Administration death records over the years 1975–2005 linked to the complete count 1940 census. We find that males born in top-quartile tree-crop counties and exposed to a cicada event during fetal development and early-life live roughly 2.2 months shorted lives; those with direct farm exposure face a reduction of nearly a year. We provide empirical evidence to examine mortality selection before adulthood, endogenous fertility, and differential data linkage rates. Additional analyses suggests that reductions in education and income during adulthood are potential mechanisms of impact. Our findings add to our understanding of the relevance of early-life insults for old-age health and mortality. [ABSTRACT FROM AUTHOR]

This paper examines the effect of removing pollutants, mainly polychlorinated biphenyls (PCBs), on home prices in Great Lakes Areas of Concern (AOCs). AOCs are heavily polluted locations identified as priorities for restoration under the Great Lakes Water Quality Agreement (GLWQA) between the United States and Canada. Since the signing of the GLWQA, AOCs have undergone cleanup actions that could encourage local redevelopment and raise nearby property values. This paper focuses on the Milwaukee Estuary AOC and estimates property owner willingness to pay as well as potential differences in willingness to pay for sediment remediation using a sorting model and home sales data before and after cleanup. Results indicate that home prices near the water increased significantly and that remediation did not change pre-existing inequalities generally favoring higher-income, predominantly white households through a process of demographic re-sorting. [ABSTRACT FROM AUTHOR]

This paper proposes a simple two-step estimation method (C limate A daptive R esponse E stimation - CARE) to estimate sectoral climate damage functions, which account for long-run adaptation. The paper applies this method in the context of residential electricity and natural gas demand for the world's fifth largest economy — California. The advantage of the proposed method is that it only requires detailed information on intensive margin behavior, yet does not require explicit knowledge of the extensive margin response (e.g., technology adoption). Using almost two billion energy bills, we estimate spatially highly disaggregated intensive margin temperature response functions using daily variation in weather. In a second step, we explain variation in the slopes of the dose response functions across space as a function of summer climate. Using 18 climate models, we simulate future demand by letting households vary consumption along the intensive and extensive margins. We show that failing to account for extensive margin adjustment in electricity demand leads to a significant underestimate of the future impacts on electricity consumption. We further show that reductions in natural gas demand more than offset any climate-driven increases in electricity consumption in this context. [ABSTRACT FROM AUTHOR]

Severe air quality hurts human capital and threatens innovative outcomes. Using unique data containing 12.8 million patent applications in China, this paper examines the causal effect of particulate matter with a diameter of 2.5 μm or less (PM 2.5) on patent innovation. We estimate a two-stage least square model with thermal inversion as an instrumental variable. Our findings show that a one μg/m3 increase in the annual average PM 2.5 concentration leads to a 1.3% decrease in the number of patents. Annual fluctuations in PM 2.5 concentration levels across cities caused the total number of patents to decrease by 1.1% during the 2006–2010 period. From 2011 to 2015, the improvement in air quality increased the number by about 2.0%. It demonstrates another innovation co-benefit of improving air quality due to the tightened regulation. [ABSTRACT FROM AUTHOR]

This paper presents a novel method to quantify the market equilibrium impacts of tighter environmental policies. The approach is taken to evaluate the welfare effects of emerging environmental regulations to protect the biodiversity of river ecosystems that put pressure on reducing hydropower generation capacity. A dataset of 129 million bids in the Nordic electricity market is used to calculate how small reductions in hydropower capacity change market outcomes and surpluses hour-by-hour for the years 2011–2022. Reaching the EU Biodiversity Strategy target of 2030 is estimated to reduce 56 MW of hydropower capacity in Finland. Such a change would lead to quantifiable welfare losses of €62 million over time, not counting environmental benefits. Notably, the producer surplus increases by €318 million over time through electricity market price changes, suggesting that instead of lobbying against biodiversity enhancing regulation, agreeing to an industry-wide implementation could benefit both the environment and the firms. Yet the fact that consumer costs increase more than the mere implementation cost reads as a sign of caution when tighter biodiversity policies are introduced. [ABSTRACT FROM AUTHOR]

It is widely acknowledged that there is an urgent need for policies that can reduce greenhouse gas emissions. Yet, the policies implemented by governments are far from sufficient to reach their long-term climate targets. In this paper, we propose a theoretical framework to study the implications of political pressure on optimal climate policy. A key feature of the framework is its ability to capture dynamic inconsistency, which naturally arises from the long time horizon of climate policies and their susceptibility to modifications due to political pressure. Our findings offer a new rationale for why green lobbying can make pollution regulation less stringent. We also show that political pressure from the polluting sector leads to a higher rate of clean energy investment chosen by the government and can shift the energy mix towards renewables in the long run. Similarly, this long-run shift can be caused by political pressure from members of the public who care only about immediate consumption. [ABSTRACT FROM AUTHOR]

This paper studies whether resilience investment mitigates damages from extreme weather events using data on offshore oil production in the Gulf of Mexico. We show that hurricanes which pass near rigs lower production and that stronger storms have larger impacts which persist for months. Regulatory changes that required rigs be designed to be resilient to major hurricanes only modestly mitigated the short-run production losses from hurricanes, reducing oil production losses by roughly 5% at 1 month and 20% 8 months after impact. They also only partly mitigated long-run losses, lowering the probability that a rig permanently exits production by 12–18 percentage points after a hurricane. [ABSTRACT FROM AUTHOR]

Following market liberalization, the vehicle population in China has increased dramatically over the past few decades. This paper examines the causal impact of the opening of a heavily used high speed rail line connecting two megacities in China in 2015, Chengdu and Chongqing, on air pollution. We use high-frequency and high spatial resolution data to track pollution along major highways linking the two cities. Our approach involves the use of a novel augmented regression discontinuity in time approach that incorporates machine learning to inform our specification choice in the first stage. Our estimates show that CO is reduced by 6.4% and PM 2.5 by 7.1% along the main affected highway. These findings are supported using a difference-in-differences approach. [ABSTRACT FROM AUTHOR]

This paper examines the relationship between high temperatures and the often overlooked conflict type of labor unrest, with evidence from China during the extended summer. Each additional hot day in a month, identified by daily average temperatures exceeding the average for that calendar month throughout the study period, leads to a 3% increase in labor unrest incidence, a 13.5% higher probability, and a 5% increase in its size the following month. We analyze effect heterogeneity by action type, firm ownership, industry, and region. Furthermore, we provide supporting evidence for pathways connecting high temperatures to labor unrest, involving firms' lost profits and workers' psychological and physiological stress. [ABSTRACT FROM AUTHOR]

Meta-regression models (MRMs) are commonly used within benefit transfer to estimate willingness to pay for environmental quality improvements. In virtually all benefit transfers of this type, a single regression model is fit to all source points in the metadata, and used to produce out-of-sample predictions for all possible policy-site applications. Despite the advantages of this approach over other types of benefit transfer, the predictive accuracy of these MRMs generally leaves room for improvement. In this paper we propose a locally-weighted regression approach to MRM estimation to enhance the accuracy of benefit transfer predictions in an environmental valuation context. We introduce the concept of locally-weighted meta-regression, provide econometric underpinnings, and discuss the construction of weight functions. We illustrate the use of cross-validation to decide between weight functions, and show how this framework can be applied in an actual benefit transfer setting. For our empirical application on willingness-to-pay for water quality improvements, we find that the proposed approach brings substantial gains in predictive accuracy in a leave-one-out setting, and measurable improvements in predictive efficiency for benefit transfer. • Semi-parametric estimation. • Bayesian modeling and methods. • Improved accuracy and efficiency for benefit transfer. • Water quality changes through environmental policy. [ABSTRACT FROM AUTHOR]

This paper examines the emission leakage by the regional environmental regulation applied in Beijing and its surrounding area. Using the unique firm-level daily emission data, we develop a novel model to estimate the size of immediate leakage through the price mechanism. Our empirics find that leakage offsets about 60% of the total amount of emission reduction in the regulated region and the aggregate emission reduction is less than two percent. We also use the iron and steel industry as an example to show how the prices of input and output factors respond to the regulation. [ABSTRACT FROM AUTHOR]