Seeing Green
Understanding Support for Inefficient Environmental Policy Instruments
Chenxi Jiang et al.
NBER Working Paper, April 2026
Abstract:
Many governments use environmental standards rather than more cost-effective market-based instruments like pollution taxes or cap-and-trade markets. Using a nationally representative survey experiment, we study whether and why limited understanding of economic principles helps explain this practice. Holding environmental impacts constant, respondents prefer standards over market-based instruments, and prefer producer taxes and cap-and-trade over consumer taxes. These preferences reflect consumers’ beliefs about how these policies will affect electricity bills. Respondents also prefer the weakest environmental targets for consumer taxes and the strongest targets for standards, which suggests that policymakers face a tradeoff between policy stringency and cost effectiveness. A separate survey of environmental economists shows that they have strikingly different beliefs about the effects of environmental policies than the respondents in our representative survey. For example, typical respondents -- in contrast to environmental economists -- believe that environmental standards increase consumer energy bills less than market-based instruments do. Educational videos on pass-through and cost-effectiveness of policies affect policy support and close some of the gap between nationally representative respondents and experts, which suggests that economic literacy is a factor in voters’ preferences.
Too hot to play it cool? Temperature and negative media bias
David Stadelmann, Tobias Thomas & Nikita Zakharov
Public Choice, March 2026, Pages 593-608
Abstract:
This paper examines the impact of outdoor temperature on media bias in a quasi-experimental setting. We take advantage of the geographical proximity of the locations of the three major US news networks, ABC News, CBS News, and NBC News, all headquartered in New York City, and granular variations in local daily temperatures. We use more than 10 years of daily hand-coded data on the tonality of evening weekday news broadcasts by each news network to estimate the effect of hot weather on negative media bias in reporting the news affiliated with the Republican and Democratic parties, controlling for time and network-month fixed effects. In line with theoretical expectations regarding human behavior, our results suggest an increase in negative media bias: a 0.5 °C (0.9 °F) increment in daily maximum temperature on a hot day (> 25 °C or > 77 °F) leads to about a 10% increase in the negative bias measured as the difference in the share of negative news about the Republicans and the Democrats. This effect is mainly driven by an increase of the share of negative news about the Republicans. This bias in political reporting exists only for maximum temperatures, as opposed to minimum or average temperatures. The results are robust to an array of placebo tests using past or future temperatures. Examining a similar effect for positive coverage bias, we detect precisely null effects, suggesting that high temperatures are associated only with biased negativity in reporting.
Measuring the Impact of Data Centers in the United States Economy: Monetary Damage from Air Pollution and Greenhouse Gas Emissions
Nicholas Muller
NBER Working Paper, April 2026
Abstract:
This paper quantifies the environmental externalities associated with electricity consumption by data centers in the United States, focusing on damages from local air pollution and greenhouse gas (GHG) emissions. Using facility-level data for approximately 2,800 operational data centers in 2025, combined with electricity grid characteristics and emissions data, the analysis estimates pollution impacts through the AP4 integrated assessment model and applies the social cost of carbon for GHG valuation. Results indicate that data centers consume roughly 250 TWh of electricity -- about 5–6% of U.S. generation -- and generate approximately $25 billion in gross external damages (GED), with a range of $10–$33 billion. These damages are highly geographically concentrated, with Texas and Virginia accounting for 30% of the national total. While GED comprises about 5% of industry GDP, this ratio varies widely across states, exceeding GDP in some regions. Planned data center expansion could increase electricity demand and associated damages by up to 85% in the near term. Despite these environmental costs, preliminary comparisons suggest that the damages attributable to AI-related energy use are small relative to potential productivity gains.
No Detectable Economic Effect of Extreme Heat After Correcting for Dependence
Ryan Brill & Abraham Wyner
University of Pennsylvania Working Paper, February 2026
Abstract:
Callahan and Mankin (2022, 2025) argue that extreme heat, measured by the maximum 5-day average temperature (Tx5d), exerts a detectable and economically meaningful impact on subnational GDP per-capita growth. In doing so, they complete the causal chain at the heart of the increasingly important area of climate attribution science, which links producers of greenhouse gasses to economic damages. We show that Callahan and Menkin’s result does not hold up when analyzed by methods that properly respect the data’s pronounced spatial and temporal dependence. We report four main findings: first, we show that C&M’s “placebo” (permutation) assessment of model is invalid since it breaks the country–year spatial/temporal correlation structure. When we implement country-preserving permutations that preserve this structure and a post-selection correction factor, statistical significance disappears. Second, we show that C&M’s results depend on few influential countries and years and removing them collapses the estimated Tx5d effect and even flips signs in some cases, reversing the direction of the economic effect. Third, we fit a novel hierarchical Bayesian model with region-within-country structure and AR(1) year effects, which show much larger uncertainty, shrinks the effect by 67–90%, and have credible intervals span zero. Finally, we implement rolling out-of-sample prediction tests with both i.i.d. and blocked cross-validation, which show that adding extreme climate variables does not improve predictive accuracy over models without them. We conclude that there is no measurable effect of extreme temperature events on GDP growth in the C&M data once the correlation structure, model selection, and outliers are handled correctly.
Social factors shape federal environmental crime prosecution patterns in the USA
Pierce Greenberg et al.
Nature Sustainability, March 2026, Pages 372-376
Abstract:
Enforcement of environmental laws and regulations is critical to achieving a cleaner environment and alleviating inequitable distributions of environmental harms. Here we examine the geographic patterning of US federal environmental crime prosecutions from 2011 to 2020. Results show that counties with higher levels of socioeconomic status have more environmental criminal prosecutions, on average, while environmental conditions such as air and water quality have no effect on environmental crime prosecution patterns.
Beliefs About the Climate Impact of Green Investing
Florian Heeb, Julian Kölbel & Camilla Weder
MIT Working Paper, February 2026
Abstract:
This paper surveys beliefs about the climate impact of green investing among academic experts and retail investors. Using the views of academic experts as a benchmark, we show that retail investors have overly optimistic climate impact beliefs. While most academic experts do not believe that a typical green fund has a meaningful climate impact, the vast majority of retail investors do. The median retail investor expects a €10,000 green investment to offset 10% of an average person's carbon footprint. By contrast, the median estimate among academic experts is 2%, with 0% being the most common estimate. Impact beliefs influence investment decisions: When informed of academic experts’ views, retail investors reduce their climate impact beliefs and willingness to pay for the green fund. Qualitative statements suggest that retail investors’ optimistic beliefs are driven by a focus on the impact of portfolio companies rather than on the impact of the investment itself.
Food Policy in a Warming World
Allan Hsiao, Jacob Moscona & Karthik Sastry
Econometrica, March 2026, Pages 537-572
Abstract:
This paper studies how governments intervene in agricultural markets to reshape the economic consequences of climate extremes. We construct a global dataset of agricultural policies and extreme heat exposure by country and crop since 1980. Extreme heat shocks to domestic production lead to policies that assist consumers by lowering domestic food prices. This effect is persistent, primarily implemented via border policies, and stronger during election years. Shocks to foreign production induce the opposite response: policies that assist producers by raising prices. These findings can be rationalized by a model in which governments use agricultural policy to redistribute among domestic interest groups. Our estimates imply that policy responses shield domestic consumers, while exacerbating losses for domestic producers and foreign consumers. Policy responses have regressive consequences globally, disproportionately harming poor and heat-exposed countries.
If You Build It, They May Not Come: Willingness to Participate in Managed EV Charging
Fiona Burlig, James Bushnell & David Rapson
NBER Working Paper, April 2026
Abstract:
Despite the importance of program participation for policy, treatment effects are often measured on self-selected samples. We study electric vehicle (EV) managed charging, intended to reduce electric grid strain by optimally allocating charging across EVs. Prior work finds large impacts of managed charging among households who volunteer for an RCT. In contrast, we test managed charging with an experiment including all EVs within a California utility. Enrollment is low even with high incentives, and we can reject even modest intent-to-treat effects on electricity consumption. Managed charging is less effective than previously thought, underscoring the value of population-wide experiments.
The potential for onshore wind repowering to hasten the energy transition in the United States
Andreas Mühlbauer et al.
Proceedings of the National Academy of Sciences, 24 March 2026
Abstract:
This study explores whether repowering onshore wind farms will help the United States (US) meet a much larger share of its current electricity demand with wind. Repowering upgrades existing wind farms with new turbines, increasing wind-farm capacity and electricity generation, with less new land requirements than greenfield projects. We analyze the US Wind Turbine Database and project the potential of US wind repowering under different scenarios. Results show that repowering alone could more than double the current US onshore wind nameplate capacity, from 153 GW to ~314 GW, at existing farms. The resulting annual onshore wind electricity generation could increase from 453 TWh in 2024 to ~911 TWh for the same weather year after repowering the fleet. Repowering could allow onshore wind to meet 21%, instead of 10.5%, of 2024 US electricity demand. Repowering is a potential multi-billion-dollar industry in the United States.
Climate Change, Deforestation, and the Expansion of the Global Agricultural Frontier
Allan Hsiao et al.
NBER Working Paper, April 2026
Abstract:
This paper studies how global warming affects deforestation and agricultural land use. Using high-resolution satellite data on global temperature, deforestation, and land cover from 2001 to 2019, we find that extreme heat shocks to agricultural productivity cause large and persistent forest loss on the world’s agricultural frontier. This effect is strongest in the tropics, in areas growing the most temperature-sensitive crops, and in regions with the most inelastic demand for agricultural products, and it does not seem to be offset by international spillovers. Moreover, we show that deforestation in response to extreme heat can be explained almost entirely by cropland expansion. We corroborate these findings using agricultural census data from Brazil, where we find evidence for a mechanism whereby heat reduces yields and raises local agricultural prices, driving cropland expansion but little land use or input adjustment along other margins. Our estimates imply that extreme heat has driven substantial forest loss and that projected warming through 2100 could lead to an additional 28 million hectares of deforestation. Our findings challenge the view that reallocation will soften the environmental consequences of climate change, suggesting instead that farmers double down and expand cropland locally when productivity falls.
Substantial aircraft contrail formation at low soot emission levels
Christiane Voigt et al.
Nature, 2 April 2026, Pages 112-118
Abstract:
Contrail cirrus clouds are a main contributor to the climate forcing from aviation. Yet, the number of contrail ice crystals forming behind aircraft with modern lean-burn engines is unknown. Theory spans a four orders of magnitude range in ice crystal numbers -- rendering related climate effects unpredictable. Here we show that lean-burn combustion reduces soot particle number emissions by three orders of magnitude compared with conventional rich–quench–lean engines -- but does not significantly decrease volatile particles or contrail ice crystal numbers -- both can exceed 10^15 particles per kg of burned fuel. Our findings arise from in-flight observations behind an A321neo aircraft with lean-burn engines, thus providing real-world confirmation of some laboratory work6 and narrowing the range of theoretical expectations. Our results indicate that the tested lean-burn engine configurations alone are unlikely to reduce the warming effect of contrails, suggesting that modifications of fuel composition and lubrication oil venting architecture may be required. We show that contrail ice particle numbers in the low-soot regime can be reduced by using low-sulfur fuels and that organic fuel constituents and lubrication oil vapours can increase contrail ice particle numbers. Future research should explore how reductions in volatile particles, apart from soot, affect contrail ice formation.