Strategic environmental disclosure: Evidence from the DOE's voluntary greenhouse gas registry

Although mandatory disclosure programs have been studied extensively, strategic voluntary environmental disclosures by firms are not well understood. We study the motivations for and impacts of firms' strategic disclosure of greenhouse gas reductions to the US government. We first model firms' joint abatement and disclosure decisions, incorporating both economic and political incentives. We then use data from the Department of Energy's Voluntary Greenhouse Gas Registry to compare reported reductions to actual emissions. We find that participants in the program engage in highly selective reporting: in the aggregate, they increase emissions over time but report reductions. In contrast, non-participants decrease emissions over time. Participants tend to be large firms facing strong regulatory pressure; pressure from environmental groups reduces the likelihood of participation, suggesting such groups viewed the program as a form of greenwash. Participating in the 1605(b) program had no significant effect on a firm's changes in carbon intensity over time.     

Demand for environmental quality information and household response: Evidence from well-water arsenic testing

Access to information about environmental quality may facilitate low-cost preventive measures that protect human health. In this paper, we study the demand for information about environmental quality and the behavioral response to the information provided. With a field experiment conducted in Bihar (India), we estimate the price sensitivity of demand for diagnostic testing of drinking water wells for arsenic of natural origin – a serious threat to the health of tens of millions of villagers across South and Southeast Asia. Demand is substantial but sensitive to price; uptake falls from 68% to 31% of households over our price range (Rs. 10 to Rs. 50). We further assess how households respond to information regarding the contamination level in their wells. About one-third of households with unsafe wells switch to a safer water source. Finally, we demonstrate that households that received adverse test outcomes are more likely to selectively forget test results, and proactively remove evidence of their wells' arsenic status.     

Environmental regulation as a double-edged sword for housing markets: Evidence from the NOx Budget Trading Program

We investigate the effects of environmental regulations on housing markets using a quasi-experimental setting—the NO_x Budget Trading Program (NBP). Hedonic theory predicts that house prices should rise as pollution levels decrease. However, environmental regulations may also affect labor markets, and thus housing demand. Employing a difference-in-differences framework, we find that house prices shifted up in the regulated areas with low manufacturing intensity, whereas in the areas with high manufacturing intensity, housing markets were weakened. We also find that in high-manufacturing-intensity areas, loan application volume declined, rejection rate augmented, and the probability of loan default increased.     

The transition from dirty to clean industries: optimal fiscal policy and the environmental Kuznets curve

This paper investigates privately and socially optimal patterns of economic development in a two-sector endogenous growth model with clean and dirty goods. We consider a second-best fiscal policy framework in which distortionary taxes jointly influence economic growth and environmental quality. In this policy setting, three conditions produce an Environmental Kuznets Curve (EKC): (i) dirty output is bounded; (ii) clean output grows endogenously; and (iii) growth in the dirty sector reduces growth in the clean sector. These conditions do not arise with a consumption externality, but can emerge with a production externality. Endogenous labor supply implications are also investigated. Although not necessary for producing an EKC, endogenous labor supply provides additional linkages that produce an EKC under circumstances in which it would otherwise not appear.