The real effect of legal institutions: Environmental courts and firm environmental protection expenditure

This paper evaluates the real effects of environmental justice reform on environmental governance at the firm level. Using the establishment of environmental courts in China as a quasi-natural experiment, our difference-in-differences estimation shows that: (1) environmental courts significantly enhance environmental investment by firms, and this relationship is robust to different specifications and alternative measures; (2) three possible channels are the improved levels of justice and enforcement of environmental protection, and the mitigation of local government intervention; (3) our findings are particularly pronounced in subsamples with severe local protectionism, state-owned enterprises (SOEs), and non-SOEs with political connections; (4) at the city-level, environmental courts significantly increase air quality and promote cities to cross the inflection point of the environmental Kuznets curve earlier. Overall, this paper reveals the micro-mechanisms behind the real effects of environmental justice on firm environmental investment, thus providing timely implications for regulators concerned with environmental protection.     

Air pollution as a cause of sleeplessness: Social media evidence from a panel of Chinese cities

We provide first evidence of a link from daily air pollution exposure to sleep loss in a panel of Chinese cities. We develop a social media-based, city-level metric for sleeplessness, and bolster causal claims by instrumenting for pollution with plausibly exogenous variations in wind patterns. Estimates of effect sizes are substantial and robust. In our preferred specification a one standard deviation increase in AQI causes an 11.6% increase in sleeplessness, and for PM_2.5 is 12.8%. The results sustain qualitatively under OLS estimation but are attenuated. The analysis provides a previously unaccounted for benefit of more stringent air quality regulation. It also offers a candidate mechanism in support of recent research that links daily air quality to diminished workplace productivity, cognitive performance, school absence, traffic accidents, and other detrimental outcomes.     

Bag leakage: The effect of disposable carryout bag regulations on unregulated bags

Leakage occurs when partial regulation of consumer products results in increased consumption of these products in unregulated domains. This article quantifies plastic leakage from the banning of plastic carryout bags. Using quasi-random policy variation in California, I find the elimination of 40 million pounds of plastic carryout bags is offset by a 12 million pound increase in trash bag purchases—with small, medium, and tall trash bag sales increasing by 120%, 64%, and 6%, respectively. The results further reveal 12–22% of plastic carryout bags were reused as trash bags pre-regulation and show bag bans shift consumers towards fewer but heavier bags. With a substantial proportion of carryout bags already reused in a way that avoided the manufacture and purchase of another plastic bag, policy evaluations that ignore leakage effects overstate the regulation's welfare gains.     

Graduated stringency within collective incentives for group environmental compliance: Building coordination in field-lab experiments with artisanal gold miners in Colombia

Small-scale gold mining is important to rural livelihoods in the developing world but also a source of environmental externalities. Incentives for individual producers are the classic policy response for a socially efficient balance between livelihoods and the environment. Yet monitoring individual miners is ineffective, or it is very costly, especially on frontiers with scattered small-scale miners. We ask whether monitoring at a group level effectively incentivizes cleaner artisanal mining by combining lower-cost external monitoring with local collective action. We employ a mining-framed, threshold-public-goods experiment in Colombia's Pacific region, with 640 participants from frontier mining communities. To study compliance with collective environmental targets, we vary the target stringency, including to compare increases over time in the stringency versus decreases. We find that collective incentives can induce efficient equilibria, with group compliance – and even inefficient overcompliance – despite the existence of equilibria with zero contributions. Yet, for demanding targets in which the reward for compliance barely outweighs the cost, compliance can collapse. Those outcomes improve with past successes for easier targets, however, so our results suggest gain from building coordination via graduated stringency.     

Intertemporal quota arbitrage in multispecies fisheries

In the management of natural resources, regulation often induces behavioral responses by resource users that ultimately undermine stated policy objectives. Examples of these unintended consequences have been associated with regulations ranging from the Endangered Species Act to laws governing clean air. In this paper we investigate an unintended behavioral response that can be triggered by conservation measures in multispecies fishery management, which leads to increased targeting of the species the conservation measures are meant to protect. Harvest is subject to stochastic variation, with output partially determined by the probability of encountering species of interest, either due to targeting or avoidance. Given the right conditions, an intertemporal arbitrage opportunity arises due to the fact that by targeting a stock in the current period, the probability of encountering that stock in the next period, when announced conservation measures are implemented, decreases. We present an empirical case study that supports the findings of the theoretical model. The results indicate that, by targeting so called weak stocks, some New England fishermen are willing to trade off increased costs today for increased expected profits in the future. To prevent the potentially harmful effects of this behavioral response, a manager may adopt precautionary provisions at the time a quota reduction is announced, or alternatively allow the industry to bank part of its current season's quota in order to alleviate the consequences of the reduction in the ensuing period. These results highlight the challenge of developing effective conservation strategies.     

Valuation of natural capital under uncertain substitutability

Natural capital is complex to value notably because of the high uncertainties surrounding the substitutability of its future ecosystem services. We examine a Lucas economy in which a consumption good is produced by combining different inputs, one of them being an ecosystem service that is partially substitutable with other inputs. The growth rate of these inputs and the elasticity of substitution evolve in a stochastic way. We characterize the socially efficient ecological discount rates that should be used to value future ecosystem services at different time horizons. We show that the inverse of the elasticity of substitution can be interpreted as the CCAPM beta of natural capital. We also show that any increase in risk of this beta reduces the ecological discount rate. If our collective beliefs about the elasticity of substitution of ecosystem services are Gaussian, the ecological discount rates go to minus infinity for finite maturities. In that case, a marginal increase in natural capital has an infinite value. We provide a realistic calibration of the model that is coherent with observed asset prices by using the model of extreme events of Barro (2006). The bliss maturity for infinite discount factors is less than 100 years in this calibration.     

Too hot to handle: The effects of high temperatures during pregnancy on adult welfare outcomes

This paper studies the long-term effects of high temperatures during pregnancy on later-life outcomes for Chinese adults. Adults experienced one additional high-temperature day during in utero period, on average, attain 0.02 fewer years of schooling, increase the risk of illiteracy by 0.18%, achieve lower standardized word-test score by 0.48%, and are shorter by 0.02 cm. The impacts are greater in the first and second trimesters. Additionally, we find that income effects represent one important channel to explain the adverse effects of hot weather. Back-of-the-envelope predictions suggest that by the end of the 21st century, a 0.14–0.54 reduction in years of education and a 0.21–0.84 cm reduction in height is likely to result from climate change, ceteris paribus.     

The endowment effect,discounting and the environment

There is a considerable body of evidence showing that our preferences exhibit both reference dependence and loss aversion, a.k.a. the endowment effect. In this paper, we consider the implications of the endowment effect for discounting, with a special focus on discounting future improvements in the environment. We show that the endowment effect modifies the discount rate via (i) an instantaneous endowment effect and (ii) a reference-updating effect. Moreover we show that these two effects often combine to dampen the preference to smooth consumption over time. What this implies for discounting future environmental benefits may then depend critically on whether environmental quality is merely a factor of production of material consumption, or whether it is an amenity. On an increasing path of material consumption, dampened consumption smoothing implies a lower discount rate. But on a declining path of environmental quality and where we derive utility directly from environmental quality, it implies a higher discount rate. On non-monotonic paths, loss aversion specifically can give rise to substantial discontinuities in the discount rate.     

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.     

Leaching toxicity characteristics of municipal solid waste incineration bottom ash

The continuously increasing production of municipal solid waste incineration bottom ash (MSWIBA) has promoted its utilization as construction material and raised environmental concern. The physico-chemical properties and leaching behavior of MSWIBA were studied, and ecotoxicological testing using a luminescent bacterium bioassay was performed to assess the ecological pollution risks associated with its leached constituents. The MSWIBA was leached by two types of leachants, H₂SO₄/HNO₃ and HAc solution, at different liquid to solid ratios and contact times. The concentrations of heavy metals and anions in the leachates were analyzed. Multivariate statistical analyses, including principle component analysis, Pearson's correlation analysis and hierarchical cluster analysis, were used to evaluate the contributions of the constituents to the toxicity (EC₅₀) of the MSWIBA leachate. The statistical analyses of the ecotoxicological results showed that the Ba, Cr, Cu, Pb, F⁻ and total organic carbon (TOC) concentrations were closely correlated with the EC₅₀ value, and these substances were the main contributors to the ecotoxicity of the MSWIBA leachate. In addition, the cluster of these variables indicated similar leaching behaviors. Overall, the research demonstrated that the ecotoxicological risks resulting from MSWIBA leaching could be assessed before its utilization, which provides crucial information for the adaptation of MSWIBA as alternative materials.