An Experiment in Voluntary Environmental Regulation: Participation in EPA′s 33/50 Program

The U.S. EPA has initiated the 33/50 program to encourage firms to voluntarily reduce releases and transfers of 17 toxic chemicals. This paper evaluates the factors leading to participation in this program to assess its potential to augment more traditional command and control regulation. The results show that large firms with substantial toxic releases in unconcentrated industries are the most likely participants. The results also indicate that public information and awareness plays an important role and that EPA and other regulators can improve environmental performance by encouraging competition in environmental quality.     

Toxics Release Information: A Policy Tool for Environmental Protection

This study examines investor reactions to the repeated public disclosure of environmental information about firms in the chemical industry and the effectiveness of this information as a decentralized mechanism for deterring their pollution. By allowing investors to benchmark the performance of firms, repeated provision of the Toxics Release Inventory led firms to incur statistically significant negative stock market returns during the one-day period following the disclosure of that information in the years 1990–1994. These losses had a significant negative impact on subsequent on-site toxic releases and a significant positive impact on wastes transferred off site, but their impact on total toxic wastes generated by these firms is negligible.     

Corporate governance and green innovation

We study the relationship between corporate governance and firms׳ environmental innovation. Exploiting changes in antitakeover legislation in the US, we show that worse governed firms generate fewer green patents relative to all their innovations. This negative effect is greater for firms with a smaller share of institutional ownership, with a smaller stock of green patents, and with more binding financial constraints. Investigating regulatory and industry variations, we also find more pronounced effects for firms operating in states with lower pollution abatement costs, and in sectors less dependent on energy inputs. Overall, our results suggest that ineffective corporate governance may constitute a major obstacle to environmental efficiency.     

Environmental policy with upstream pollution abatement technology firms

This paper examines how the existence of an upstream abatement technology sector affects optimal environmental policy. We explore whether the policy should be especially stringent in order to spur a successful export industry based on abatement technology. Furthermore, we investigate if a stringent policy can be used to increase competition in the upstream sector. Our point of departure is a three-stage game between a government in a country with a polluting downstream industry, and a limited number of upstream firms supplying abatement technologies. The government moves first, and may use its environmental policy strategically to influence the behavior of the upstream technology firms. We find that an especially stringent environmental policy towards the polluting downstream sector may be well founded, as it increases competition between the technology suppliers, leading to lower abatement costs. However, to our surprise, an especially stringent environmental policy is not a particularly good industrial policy with respect to developing successful new export sectors based on abatement technology.     

The effect of pollution on crime: Evidence from data on particulate matter and ozone

We estimate the effect of short-term air pollution exposure (PM_2.5 and ozone) on several categories of crime, with a particular emphasis on aggressive behavior. To identify this relationship, we combine detailed daily data on crime, air pollution, and weather for an eight-year period across the United States. Our primary identification strategy employs extremely high dimensional fixed effects and we perform a series of robustness checks to address confounding variation between temperature and air pollution. We find a robust positive effect of increased air pollution on violent crimes, and specifically assaults, but no relationship between increases in air pollution and property crimes. The effects are present in and out of the home, at levels well below Ambient Air Pollution Standards, and PM_2.5 effects are strongest at lower temperatures. The results suggest that a 10% reduction in daily PM_2.5 and ozone could save $1.4 billion in crime costs per year, a previously overlooked cost associated with pollution.     

Multiple receptor ambient monitoring and firm compliance with environmental taxes under budget and target driven regulatory missions

We analyze the potential for an environmental monitoring agency under different regulatory missions to use multiple measures of ambient pollution levels to induce firm compliance via endogenously determined probabilistic firm-level inspections of polluting activities. Departing from previous analyses, we consider a framework where the regulator has multiple, rather than a single, measures of ambient pollution in a setting where many firms are subject to a self-reported emissions tax that is not perfectly enforceable. Under a budget-driven mission, we show that a regulator can fruitfully utilize the added information from multiple ambient monitoring receptors to induce improved environmental compliance through the creation of strategic interactions among firms. Additionally, our results provide new evidence on the relative efficiency of budget- vs. target-driven environmental enforcement missions.     

Pollution Haven and Corruption Paradise

In this paper, we present a simple theoretical extension from the Economic Geography literature to characterize the main features of pollution havens (lax environmental regulation, good market access to high-income countries and corruption opportunities). Using structural and reduced-form estimations, we find that pollution havens are not a “popular myth” for European firms, laxer environmental standards significantly explain the location choice of polluting affiliates. We analyze in depth the role of trade costs (using various bilateral and multilateral measures), a 1% increase in access to the European market from a pollution haven fosters relocation there by 0.1%. We also find that corruption lowers environmental standards, which strongly attract polluting firms: a 1% increase of corruption fuels relocation by 0.28%. We test the economic significance of these empirical findings via simulations. The protection of the European market (e.g., a carbon tax on imports) to stop relocations to pollution havens must be high (a decrease of the European market for Morocco and Tunisia equivalent to 13%) not to say prohibitive (31% for China).     

Characterising populations living close to intensive farming and composting facilities in England

• Bioaerosol emitted from farming and composting facilities may pose health risks. • We describe population characteristics around these sites and infer public concern. • Sites were mapped and overlaid with population, demographic and school data. • Approximately 16% of the population and 15% of schools are located near these sites. • More community health studies need to be conducted around these sites. Bioaerosol exposure has been linked to adverse respiratory conditions. Intensive farming and composting facilities are important anthropogenic sources of bioaerosols. We aimed to characterise populations living close to intensive farming and composting facilities. We also infer whether the public are becoming more concerned about anthropogenic bioaerosol emissions, using reports of air pollution related incidents attributed to facilities. We mapped the location of 1,257 intensive farming and 310 composting facilities in England in relation to the resident population and its characteristics (sex and age), area characteristics (deprivation proxy and rural/urban classification) and school locations stratified by pre-defined distance bands from these bioaerosol sources. We also calculated the average number of air pollution related incidents per year per facility. We found that more than 16% of the population and 15% of schools are located within 4,828 m of an intensive farming facility or 4,000 m of a composting facility; few people (0.01%) live very close to these sites and tend to be older people. Close to composting facilities, populations are more likely to be urban and more deprived. The number of incidents were attributed to a small proportion of facilities; population characteristics around these facilities were similar. Results indicate that populations living near composting facilities (particularly>250 to≤4,000 m) are mostly located in urban areas (80%–88% of the population), which supports the need for more community health studies to be conducted. Results could also be used to inform risk management strategies at facilities with higher numbers of incidents.     

Emergence asynchrony between herbivores leads to apparent competition in the field

It has been established that herbivore populations can be structured by apparent competition, even if they do not compete directly for resources. But we lack evidence on the mechanisms behind such indirect competition. This study shows that temporal asynchronies in emergence time lead to apparent competition via shared natural enemies in a leafminer-parasitoid community. We present three kinds of evidence on mechanisms driving apparent competition. First, we conducted a two-year population census of Liriomyza helianthi and Calycomyza platyptera, along with all associated parasitoids, at seven sites in the Californian Central Valley, USA. We then assessed C. platyptera parasitism on 16 vegetation islands, half with experimental removal of early-season L. helianthi populations. Finally, we examined parasitoid host preference between leafminer species. We found that Liriomyza helianthi populations emerged approximately one month before C. platyptera. Experimental removal of L. helianthi populations in the early summer led to a 60% reduction in parasitism of C. platyptera. We found no evidence of differential parasitoid preference for host species. The findings suggest that temporal asynchrony can lead to negative effects on later-emerging species and that such indirect competition may be a major structuring force in herbivore communities.     

Same stimuli,different responses: a pilot study assessing air pollution visibility impacts on emotional well-being in a controlled environment

● Emotional responses to visibility-reducing haze was assessed in a controlled lab. ● Valence and arousal have non-linear responses to pollution-caused low visibility. ● Repetitive exposure aggravates negative emotions in severely polluted conditions. ● Emotional bias to pollution relates with gender, decisiveness, attitude to clean air. A growing number of studies have shown that impaired visibility caused by particulate matter pollution influences emotional wellbeing. However, evidence is still scant on how this effect varies across individuals and over repetitive visual exposure in a controlled environment. Herein, we designed a lab-based experiment (41 subjects, 6 blocks) where participants were presented with real-scene images of 12 different PM_2.5 concentrations in each block. Emotional valence (negative to positive) and arousal (calm to excited) were self-rated by participants per image, and the response time for each rating was recorded. We find that as pollution level increases from 10 to 260 µg/m³, valence scores decrease, whereas arousal scores decline first and then bounce back, following a U-shaped trend. When air quality deteriorates, individual variability decreases in hedonic valence but increases in arousal. Over blocks, repetitive visual exposure increases valence at a moderate pollution level but aggravates negative emotions in severely polluted conditions (> 150 µg/m³). Finally, we find females, people who are slow in making responses, and those who are highly aroused by clean air tend to express more negative responses (so-called negativity bias) to ambient pollution than their respective counterparts. These results provide deeper insights into individual-level emotional responses to dirty air in a controlled environment. Although the findings in our pilot study should only be directly applied to the conditions assessed herein, we introduce a framework that can be replicated in different regions to assess the impact of air pollution on local emotional wellbeing.     

Directing technical change from fossil-fuel to renewable energy innovation: An application using firm-level patent data

In this paper we provide an analysis of directed technical change in the sector of electricity generation. We rely on patent data in fossil-fuel (FF) and renewable energy (REN) technologies for 5471 European firms over the 1978–2006 period. The novelty of our approach is in the focus on firm׳s heterogeneity in driving technological change. We make a distinction between small specialized firms, which innovate in only one type of technology, and large mixed firms, which innovate in both technologies, to analyse how REN patents can replace FF ones at the sector level both through a shift in innovation activities within existing firms and through firms׳ entry and exit. We use zero-inflated count data estimation techniques to identify the factors that affect specialized versus mixed firms׳ patenting behaviour both at the intensive (i.e., levels of innovation) and extensive (i.e., technological entry) margins. We further investigate the implications of our firm-level estimations for reducing the gap between REN and FF innovation at the aggregate level. We establish two key findings: (1) a decrease in the FF-REN technology gap mainly comes about through technological entry of specialized REN firms following an increase in REN market size; (2) increases in FF prices, FF market size, and FF knowledge stocks all increase the technology gap by increasing mixed firms FF innovation rates. An important implication of our results is that policies aimed at increasing REN innovation should focus on helping small firms to start and sustain innovation in the long-run.     

The effects of license plate-based driving restrictions on air quality: Theory and empirical evidence

A typical driving restriction prohibits drivers from using their vehicles on given weekdays, based on the last digits of their vehicles’ license plates. A number of cities in developing countries have used license plate-based driving restrictions as a policy for reducing urban air pollution and traffic congestion. This paper develops a theoretical model of the effects of license plate-based driving restrictions on air quality that combines an economic model with information about the sources and atmospheric chemistry of different air pollutants. We then draw upon suggestive empirical evidence from license plate-based driving restrictions implemented in Bogotá, Colombia. Consistent with our theory model, we find suggestive empirical evidence that under certain circumstances, due to substitution, the purchase of a second car, the use of alternative modes of transportation, and/or atmospheric chemistry, it is possible for license plate-based driving restrictions to increase air pollution. Also consistent with our theory, we find that license plate-based driving restrictions may have different effects on different air pollutants, reflecting heterogeneity in the sources and atmospheric chemistry of the pollutants. In particular, owing to atmospheric chemistry, it is possible for a license plate-based driving restriction to cause a significant decrease in NO and a significant increase in NO₂, NO_x, and O₃.     

Role of competition in phytoplankton population for the occurrence and control of plankton bloom in the presence of environmental fluctuations

Termination of harmful algal blooms (HABs) and coexistence of phytoplankton–zooplankton populations are of great importance to human health, ecosystem, environment, tourism and fisheries. In this paper, we propose a three component model consisting of non-toxic phytoplankton (NTP), toxin producing phytoplankton (TPP) and zooplankton (Z). The growth of zooplankton species is assume to reduce due to toxic chemicals released by TPP population. We have extended the model proposed by Chattopadhyay et al. [Chattopadhyay, J., Sarkar, R.R., Pal, S., 2004. Mathematical modelling of harmful algal blooms supported by experimental findings. Ecol. Comp. 1, 225–235] by including competition terms between TPP and NTP. We observe the effect of competition factors both in the presence and absence of the environmental fluctuation. From our field as well as model analysis we observe that competition helps in the coexistence of the species, but if the effect of competition is very high on the TPP population, it results in planktonic bloom. It is shown that the coexistence equilibrium loses its stability when the competition coefficient crosses a critical value and resulting Hopf-bifurcation around the positive equilibrium depicting oscillations phenomena of the populations.     

Environmental federalism and environmental liability

Environmental federalism considers what level of government should optimally regulate pollution. This paper addresses this question for accidental pollution, which government regulates through the ex post liability regimes of either negligence or strict liability. We find that decentralizing the choice between these regimes does not, in general, induce the socially optimal outcome. When firms can pay all damages, all regions may choose negligence and impose an overly strict standard of due care. When firms may be bankrupted by damages, all regions may choose strict liability, which induces too little care. In addition, asymmetric equilibria are possible in which some regions choose negligence, others strict liability. Combining negligence with a Pigovian tax, or strict liability with a bonding requirement can align regional authorities' incentives with those of a central government.     

Voluntary corporate environmental initiatives and shareholder wealth

Researchers debate whether environmental investments reduce firm value or actually improve financial performance. We provide some compelling evidence on shareholder wealth effects of membership in voluntary environmental programs (VEPs). Companies announcing membership in EPA's Climate Leaders, a program targeting reductions in greenhouse gas emissions, experience significantly negative abnormal stock returns. The price decline is larger in firms with poor corporate governance structures, and for high market-to-book (i.e., high growth) firms. However, firms joining Ceres, a program involving more general environmental commitments, have insignificant announcement returns, as do portfolios of industry rivals. Overall, corporate commitments to reduce greenhouse gas emissions appear to conflict with firm value maximization. This has important implications for policies that rely on voluntary initiatives to address climate change. Further, we find that firms facing climate-related shareholder resolutions or firms with weak corporate governance standards – giving managers the discretion to make such voluntary environmentally responsible investment decisions – are more likely to join Climate Leaders; decisions that may result in lower firm value.     

Voluntary corporate environmental initiatives and shareholder wealth

Researchers debate whether environmental investments reduce firm value or actually improve financial performance. We provide some compelling evidence on shareholder wealth effects of membership in voluntary environmental programs (VEPs). Companies announcing membership in EPA's Climate Leaders, a program targeting reductions in greenhouse gas emissions, experience significantly negative abnormal stock returns. The price decline is larger in firms with poor corporate governance structures, and for high market-to-book (i.e., high growth) firms. However, firms joining Ceres, a program involving more general environmental commitments, have insignificant announcement returns, as do portfolios of industry rivals. Overall, corporate commitments to reduce greenhouse gas emissions appear to conflict with firm value maximization. This has important implications for policies that rely on voluntary initiatives to address climate change. Further, we find that firms facing climate-related shareholder resolutions or firms with weak corporate governance standards – giving managers the discretion to make such voluntary environmentally responsible investment decisions – are more likely to join Climate Leaders; decisions that may result in lower firm value.     

‘Effortless Perfection:’ Do Chinese cities manipulate air pollution data?

This paper uses unique data on daily air pollution concentrations over the period 2001–2010 to test for manipulation in self-reported data by Chinese cities. First, we employ a discontinuity test to detect evidence consistent with data manipulation. Then, we propose a panel matching approach to identify the conditions under which irregularities may occur. We find that about 50% of cities reported dubious PM₁₀ pollution levels that led to a discontinuity at the cut-off. Suspicious data reporting tends to occur on days when the anomaly is least detectable. Our findings indicate that the official daily air pollution data are not well behaved, which provides suggestive evidence of manipulation.     

Environmental pollution and biodiversity: Light pollution and sea turtles in the Caribbean

We examine the impact of pollution on biodiversity by studying the effect of coastal light pollution on the sea turtle population in the Caribbean. To this end we assemble a panel data set of sea turtle nesting activity and satellite-derived measures of nighttime light. Controlling for the surveyor effort, the local economic infrastructure, and spatial spillovers, we find that nighttime light significantly reduces the number of sea turtle nests. According to data on replacement costs for sea turtles raised in captivity, our result suggests that the increase in lighting over the last two decades has resulted in the loss of close to 1800 sea turtles in the Caribbean, worth up to $288 million. Incorporating our empirical estimates into a stage-structured population model, we discover that the dynamic effect of nighttime light on future generations of sea turtles is likely to be much larger, with a cost of approximately $2.8 billion for Guadeloupe alone. More generally, our study provides a new approach to valuing the cost of environmental pollution associated with species extinction.     

The higher price of cleaner fuels: Market power in the rail transport of fuel ethanol

This paper provides evidence of market power in the transportation of ethanol used in reformulated gasoline and alternative transportation fuels. I estimate a reduced form model for railroad route-level prices. My identification strategy instruments for railroad entry, controls for selection and explicitly models capacity constraints. A detailed understanding of this industry is important because U.S. environmental policies seek to substantially expand ethanol use. Evidence of market power may alter the types of policies pursued by lawmakers. I find that ethanol shipment prices are lower for more competitive routes. I also find evidence that railroads price discriminate based on environmental regulation at route destinations. Monopolist prices for shipments to carbon monoxide non-attainment areas are 3% higher than shipments to other destinations. This price premium falls sharply with increased competition. This suggests a perverse result where environmental regulation increases the price of a clean input.     

Effects of frequent mating on sex allocation in the simultaneously hermaphroditic great pond snail (Lymnaea stagnalis)

Simultaneous hermaphrodites have the opportunity to control the allocation of resources to the male and female function depending on the circumstances. Such flexibility also provides the possibility to influence sex allocation in the mating partner. To investigate this idea, we measured egg production (female investment) and sperm production as well as prostate gland size (both are part of male investment) under different mating regimes in the great pond snail Lymnaea stagnalis. We find no evidence for the prediction from sex allocation theory that sperm production increases with mating frequency. However, we do find that animals with more mating opporunities develop smaller prostate glands, in which seminal fluid is produced. Moreover, repeated mating increases egg production, thus shifting allocation towards the female function, and probably decreases growth. So, our data hint at a three-way trade-off between part of the male function (prostate gland), female function, and growth. Interestingly, sex allocation seems to be shifted in the opposite direction from the one predicted by theory. We discuss how this feminization is suggestive of a direct manipulation by the sperm donor, probably to stimulate immediate sperm use.