It's everywhere
Regulation-Induced Pollution Substitution
Matthew Gibson
Review of Economics and Statistics, forthcoming
Abstract:
Environmental regulations may cause firms to re-optimize over pollution inputs. By regulating air emissions in particular counties, the Clean Air Act (CAA) gives firms incentives to substitute: 1) toward polluting other media, like waterways; and 2) toward pollution from plants in other counties. I test these hypotheses using the EPA Toxic Release Inventory (TRI). Regulated plants increase their ratio of water to air emissions by 177 percent (102 log points) and their level of water emissions by 105 percent (72 log points). Regulation of an average plant increases air emissions at unregulated plants within the same firm by 11 percent.
Air Quality and Error Quantity: Pollution and Performance in a High-Skilled, Quality-Focused Occupation
James Archsmith, Anthony Heyes & Soodeh Saberian
Journal of the Association of Environmental and Resource Economists, October 2018, Pages 827-863
Abstract:
We provide the first evidence that short-term exposure to air pollution affects the work performance of a group of highly skilled, quality-focused employees. We repeatedly observe the decision making of individual professional baseball umpires, quasi-randomly assigned to varying air quality across time and space. Unique characteristics of this setting combined with high-frequency data disentangle effects of multiple pollutants and identify previously underexplored acute effects. We find that a 1 ppm increase in 3-hour CO causes an 11.5% increase in the propensity of umpires to make incorrect calls and a 10 μg/m3 increase in 12-hour PM2.5 causes a 2.6% increase. We control carefully for a variety of potential confounders, and results are supported by robustness and falsification checks. Our estimates imply that a 3% reduction in productive output is associated with a change in CO concentrations equivalent to moving from the 25th to the 95th percentile of the CO distribution in many of the largest US cities.
Bankruptcy as Bailout: Coal, Chapter 11, and the Erosion of Federal Law
Joshua Macey
Stanford Law Review, forthcoming
Abstract:
Half of all of the coal produced in the United States is mined by companies that have gone bankrupt in the last four years. This Article explains how those bankruptcy proceedings have operated to undermine federal environmental and labor laws. In particular, coal companies have used Chapter 11 to discharge or otherwise evade congressionally-imposed liabilities requiring that they pay lifetime health benefits to coal miners and restore land degraded by surface mining. Using financial information reported to the SEC and in their reorganization agreements, we show that between 2015 and 2017, many coal companies have escaped Chapter 7 liquidation and instead restructured under Chapter 11 only by (a) avoiding billions of dollars of federally-mandated environmental and retiree liabilities and (b) making impossible assumptions in their restructuring plans. In other words, the viability of the coal industry today is predicated on the ability of coal companies to use bankruptcy law to erode other federal laws. The use of Chapter 11 to undermine environmental and labor laws presents a novel challenge to the prevailing consensus that bankruptcy proceedings should prioritize Chapter 11 reorganization over Chapter 7 liquidation. Recent coal company bankruptcies show that the Bankruptcy Code is being used to pass the costs of externalities onto third parties. Chapter 11 thereby allows the continued operation of companies that impose a net cost on society, and it can do so despite the existence of a statutory scheme designed to force such firms to liquidate. We argue that when reorganization undermines Congress’s efforts to force firms to internalize the costs they impose on others, liquidation is the preferred method for resolving corporate bankruptcies. We also argue that the use of Chapter 11 to discharge financial liabilities whose purpose is to further policy goals impedes the government’s ability to regulate via market-based solutions. Thus, in discharging regulatory debts, bankruptcy judges create powerful incentives for regulators to adopt the widespread but generally disfavored command-and-control model of regulation. We conclude by arguing that it is illegal to discharge or subordinate these federal regulatory obligations.
Urban form and driving: Evidence from US cities
Gilles Duranton & Matthew Turner
Journal of Urban Economics, November 2018, Pages 170-191
Abstract:
We estimate the effect of urban form on driving. We match the best available travel survey for the US to spatially disaggregated national maps that describe population density and demographics, sectoral employment and land cover, among other things. To address inference problems related to sorting and endogenous density, we develop an estimator that relies on an assumption of imperfect mobility and exploit quasi-random variation in subterranean geology. The data suggest that increases in density cause small decreases in individual driving. Applying our estimates to the observed distribution of density and driving in the US suggests that plausible densification policies cause decreases in aggregate driving that are small, both absolutely and relative to what might be expected from gas taxes or congestion charging.
Facultative Adjustments in Future Planning Tendencies: Insights on Life History Plasticity from the Flint Water Crisis
Daniel Kruger
Evolutionary Psychological Science, December 2018, Pages 372–383
Abstract:
Life history theory (LHT) is a powerful explanatory framework examining how developmental environments and life experiences shape allocations of effort to fitness-promoting domains in nested sets of trade-offs. Time orientation is a central psychological aspect of human life history variation, representing the degree to which behaviors are oriented towards immediate versus future goals. Identifying critical sensitive periods for shaping life history variation and verifying the scope of life history plasticity are important issues for both theory and practical application. Many LHT frameworks propose sensitive periods from gestational development through middle childhood, though recent research suggests facultative adjustments may occur much later in the lifespan. The current study examines how experiences of poor tap water quality during the Flint water crisis, associated with toxic contamination and adverse health effects, may have affected time orientations. Degraded expectations for health and longevity may have affected psychological aspects of life history variation, with important consequences for health-related behaviors. Controlling for socio-demographics and other environmental factors associated with life history variation, those who experienced worse tap water quality had lower general tendencies for future planning. Tap water quality experiences predicted several health-related behaviors, independent of socio-demographics, some relationships were mediated through tendencies for future planning.
Environmental Disclosure Programs, Community Pressure and the Spatial Redistribution of Pollution: The Relocation of Toxic Releasing Facilities After the TRI
Xiao Wang et al.
University of Illinois Working Paper, October 2018
Abstract:
This paper analyzes the effects of community pressure induced by the public disclosure of toxic emissions information on the relocation by toxic-releasing facilities. We find that, following this disclosure, toxic releasing facilities are more likely to relocate from communities with high population density, high income, and high educational attainment, and into communities with lower population density, income, and educational attainment. There is also evidence that small facilities grow faster after relocating and thus also emit more toxic pollutants. Therefore, the relocation of toxic polluters has contributed to a worsening of environmental justice following the public release of emissions information.
Please in My Backyard: Quiet Mobilization in Support of Fracking in an Appalachian Community
Colin Jerolmack & Edward Walker
American Journal of Sociology, September 2018, Pages 479-516
Abstract:
Environmental justice and social movements scholarship demonstrates how not-in-my-backyard activism by more privileged communities leaves the disadvantaged with “locally unwanted land uses.” Yet it overlooks instances of local support for risky industries. Our ethnographic case shows how a rural, white, mixed-income Pennsylvania community adopted a please-in-my-backyard stance toward shale gas extraction (fracking). Residents invited development on their land and supported it through quiet mobilization. While landowners prioritized benefits over risks, economics cannot fully explain their enthusiasm. Consistent with public opinion research, partisan identities and community obligations undergirded industry support even when personal benefits were limited. Devotion to self-reliance and property rights led residents to defend landowners’ freedom to lease their land. Cynicism toward government precluded endorsing environmental regulation, and the perception of antifracking activists as “liberal” outsiders linked support for fracking with community solidarity. This case illustrates why communities may champion risky industries and complicates theories of nonmobilization.
Reputational Penalties for Environmental Violations: A Pure and Scientific Replication Study
Jacob Brady, Mary Evans & Eric Wehrly
International Review of Law and Economics, forthcoming
Abstract:
Our pure replication of Karpoff et al., (2005) confirms their findings of negative abnormal returns and insignificant reputational penalties following the announcement of environmental violations in the last two decades of the twentieth century. A scientific replication using more recent data finds a decrease in the magnitude of negative abnormal returns but similarly insignificant reputational penalties on average. While mean legal penalties for violations are higher in the more recent period, these penalties have decreased relative to firms’ market valuations.
Political Decoupling: Private Implementation of Public Policy
Manuel Teodoro, Youlang Zhang & David Switzer
Policy Studies Journal, forthcoming
Abstract:
Where policy goals can be achieved through regulation of private firms, private provision of public services allows governments to separate public policies from their political costs by shifting those costs to the private sector. Over the past three decades, financial decoupling has emerged as a regulatory strategy for promoting conservation, especially in the energy sector. Decoupling refers to the separation of a firm’s revenues from the volume of its product consumed, which allows companies to pursue resource efficiency free from financial risk. Similarly, when private firms provide public services, they separate public policies from their political costs. This political decoupling allows governments to pursue controversial policies while avoiding their attendant political risks. Applied to environmental policy, this theory implies that potentially unpopular conservation policies are more likely to be adopted and succeed when implemented through private firms. As an initial test of the theory, we analyze California water utilities and their responses to that state’s drought from 2015–2017. Analysis shows that, compared with those served by local government utilities, private utilities adopted more aggressive conservation measures, were more likely to meet state conservation standards, and conserved more water.
Water shortages worsened by reservoir effects
Giuliano Di Baldassarre et al.
Nature Sustainability, November 2018, Pages 617–622
Abstract:
The expansion of reservoirs to cope with droughts and water shortages is hotly debated in many places around the world. We argue that there are two counterintuitive dynamics that should be considered in this debate: supply–demand cycles and reservoir effects. Supply–demand cycles describe instances where increasing water supply enables higher water demand, which can quickly offset the initial benefits of reservoirs. Reservoir effects refer to cases where over-reliance on reservoirs increases vulnerability, and therefore increases the potential damage caused by droughts. Here we illustrate these counterintuitive dynamics with global and local examples, and discuss policy and research implications.
Transit access and neighborhood segregation. Evidence from the Dallas light rail system
Kilian Heilmann
Regional Science and Urban Economics, November 2018, Pages 237-250
Abstract:
I study the effect of transit access on neighborhood incomes by exploiting a quasi-experimental setting of an extensively planned, but only partially built urban rail system in Dallas. I show that neighborhood income in census tracts that received rail access increases compared to neighborhoods that were promised to receive access, but did not due to funding cuts. The treatment effect is positively correlated with initial neighborhood income and negative for the poorest tracts. This reconciles gentrification and “poverty magnet” effects of rail infrastructure found in the earlier literature and highlights the role of transit as a potential incubator for income segregation.
Who Acquires Toxic Targets?
Chelsea Liu & Alfred Yawson
Journal of Empirical Legal Studies, December 2018, Pages 842-874
Abstract:
We examine the consequences of environmental lawsuits in the market for corporate control. Using a sample of lawsuits filed in the U.S. federal courts, we document that environmental litigation reduces sued firms’ bidding activities during the subsequent three years. Purchasing targets that have been sued for environmental violations is value destroying for acquirers, as evidenced by their announcement‐date returns. Finally, firms with poor corporate governance are more likely to acquire such “toxic” targets. Our empirical results are robust to falsification tests using securities and contractual lawsuits, controlling for endogeneity using an instrumental variable approach, propensity score matching, employing an alternative lawsuit sample, and alternative control variables and model specifications. Our findings have significant implications for policymakers, corporate executives, and environmental interest groups.
Lead exposure and academic achievement: Evidence from childhood lead poisoning prevention efforts
Lucy Sorensen et al.
Journal of Population Economics, January 2019, Pages 179–218
Abstract:
Though the adverse consequences of lead exposure in children have been well known for over a century, the recent Flint water crisis has drawn renewed attention to the impacts of lead exposure on human health and development. This study considers connections to educational outcomes, asking whether population-level lead exposure in early childhood influences later academic achievement and racial achievement gaps. It assesses the effectiveness of recent local- and state-level lead hazard control programs in mitigating exposure and uses this source of exogenous variation in early childhood exposure across birth cohorts to draw inferences about the long-term effects of lead on mean student test scores. Our findings indicate that lead hazard control grants reduced lead poisoning incidents by over 70% of the baseline prevalence. And each one percentage point reduction in lead poisoning in early childhood translated to a growth of 0.04 standard deviations in student math test scores and 0.08 standard deviations in student reading scores. This same reduction in lead poisoning narrowed both the white-Hispanic math achievement gap and white-Hispanic reading achievement gap by 0.06 standard deviations, implying important downstream consequences for economic inequality.
Detecting and explaining why aquifers occasionally become degraded near hydraulically fractured shale gas wells
Josh Woda et al.
Proceedings of the National Academy of Sciences, 4 December 2018, Pages 12349-12358
Abstract:
Extensive development of shale gas has generated some concerns about environmental impacts such as the migration of natural gas into water resources. We studied high gas concentrations in waters at a site near Marcellus Shale gas wells to determine the geological explanations and geochemical implications. The local geology may explain why methane has discharged for 7 years into groundwater, a stream, and the atmosphere. Gas may migrate easily near the gas wells in this location where the Marcellus Shale dips significantly, is shallow (∼1 km), and is more fractured. Methane and ethane concentrations in local water wells increased after gas development compared with predrilling concentrations reported in the region. Noble gas and isotopic evidence are consistent with the upward migration of gas from the Marcellus Formation in a free-gas phase. This upflow results in microbially mediated oxidation near the surface. Iron concentrations also increased following the increase of natural gas concentrations in domestic water wells. After several months, both iron and SO42− concentrations dropped. These observations are attributed to iron and SO42− reduction associated with newly elevated concentrations of methane. These temporal trends, as well as data from other areas with reported leaks, document a way to distinguish newly migrated methane from preexisting sources of gas. This study thus documents both geologically risky areas and geochemical signatures of iron and SO42− that could distinguish newly leaked methane from older methane sources in aquifers.