Toxic assets
Environmental Externalities and Cost of Capital
Sudheer Chava
Management Science, forthcoming
Abstract:
I analyze the impact of a firm's environmental profile on its cost of equity and debt capital. Using implied cost of capital derived from analysts' earnings estimates, I find that investors demand significantly higher expected returns on stocks excluded by environmental screens (such as hazardous chemical, substantial emissions, and climate change concerns) compared to firms without such environmental concerns. Lenders also charge a significantly higher interest rate on the bank loans issued to firms with these environmental concerns. I provide evidence that the environmental profile of a firm is not simply proxying for an omitted component of its default risk. Further, firms with these environmental concerns have lower institutional ownership and fewer banks participate in their loan syndicate than firms without such environmental concerns. These results suggest that exclusionary socially responsible investing and environmentally sensitive lending can have a material impact on the cost of equity and debt capital of affected firms.
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The Effect of Competition on Toxic Pollution Releases
Daniel Simon
Indiana University Working Paper, June 2014
Abstract:
We examine how competition affects toxic industrial releases, using five years of data from thousands of facilities across hundreds of different industries. Our main result indicates that competition reduces toxic plant-level releases. On average, each one-percentage-point reduction in the Herfindahl Index (HHI) results in a two-percent reduction in a facility’s toxic releases. We find similar effects using four- and eight-firm concentration ratios, and the effect is larger in more concentrated industries. In addition, we find that competition reduces releases of carcinogenic chemicals, a category of pollutants that pose a particularly acute public health concern. Our results also shed some light on the mechanisms through which firms reduce pollution releases. We find that facilities in more competitive industries engage in more pollution reduction activities. At the same time, we find some evidence that is consistent with facilities in more competitive industries reducing pollution by reducing output. Taken together, our results fail to provide support for the hypothesis that competition leads to more socially undesirable behavior.
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Fine Particulate Matter Air Pollution and Cognitive Function Among Older US Adults
Jennifer Ailshire & Eileen Crimmins
American Journal of Epidemiology, forthcoming
Abstract:
Existing research on the adverse health effects of exposure to pollution has devoted relatively little attention to the potential impact of ambient air pollution on cognitive function in older adults. We examined the cross-sectional association between residential concentrations of particulate matter with aerodynamic diameter of 2.5 μm or less (PM2.5) and cognitive function in older adults. Using hierarchical linear modeling, we analyzed data from the 2004 Health and Retirement Study, a large, nationally representative sample of US adults aged 50 years or older. We linked participant data with 2000 US Census tract data and 2004 census tract–level annual average PM2.5 concentrations. Older adults living in areas with higher PM2.5 concentrations had worse cognitive function (β = −0.26, 95% confidence interval: −0.47, −0.05) even after adjustment for community- and individual-level social and economic characteristics. Results suggest that the association is strongest for the episodic memory component of cognitive function. This study adds to a growing body of research highlighting the importance of air pollution to cognitive function in older adults. Improving air quality in large metropolitan areas, where much of the aging US population resides, may be an important mechanism for reducing age-related cognitive decline.
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Chronic exposure to low-dose radiation at Chernobyl favors adaptation to oxidative stress in birds
Ismael Galván et al.
Functional Ecology, forthcoming
Abstract:
Ionizing radiation produces oxidative stress, but organisms can adapt to their exposure with physiological adaptive responses. However, the role of radioadaptive responses in wild populations remains poorly known. At Chernobyl, studies of birds and other taxa including humans show that chronic exposure to radiation depletes antioxidants and increases oxidative damage. Here we present analyses of levels of the most important intracellular antioxidant (i.e., glutathione, GSH), its redox status, DNA damage and body condition in 16 species of birds exposed to radiation at Chernobyl. We use an approach that allows considering the individual bird as the sampling unit while controlling for phylogenetic effects, thus increasing the statistical power by avoiding the use of species means as done for most previous comparative studies. As a consequence, we found a pattern radically different from previous studies in wild populations, showing that GSH levels and body condition increased, and oxidative stress and DNA damage decreased, with increasing background radiation. Thus, when several species are considered, the overall pattern indicates that birds are not negatively affected by chronic exposure to radiation and may even obtain beneficial hormetic effects following an adaptive response. Analysis of the phylogenetic signal supports the existence of adaptation in the studied traits, particularly in GSH levels and DNA damage. We also show that, under equal levels of radiation, the birds that produce larger amounts of the pigment pheomelanin and lower amounts of eumelanin pay a cost in terms of decreased GSH levels, increased oxidative stress and DNA damage, and poorer body condition. Radiation, however, diminished another potential cost of pheomelanin, namely its tendency to produce free radicals when exposed to radiation, because it induced a change toward the production of less pro-oxidant forms of pheomelanin with higher benzothiazole-to-benzothiazine ratios, which may have facilitated the acclimation of birds to radiation exposure. Our findings represent the first evidence of adaptation to ionizing radiation in wild animals, and confirm that pheomelanin synthesis represents an evolutionary constraint under stressful environmental conditions because it requires GSH consumption.
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The future of oil: Geology versus technology
Jaromir Benes et al.
International Journal of Forecasting, forthcoming
Abstract:
We discuss and reconcile the geological and economic/technological views concerning the future of world oil production and prices, and present a nonlinear econometric model of the world oil market that encompasses both views. The model performs far better than existing empirical models in forecasting oil prices and oil output out-of-sample. Its point forecast is for a near doubling of the real price of oil over the coming decade, though the error bands are wide, reflecting sharply differing judgments on the ultimately recoverable reserves, and on future price elasticities of oil demand and supply.
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Imminence of peak in US coal production and overestimation of reserves
Nathan Reaver & Sanjay Khare
International Journal of Coal Geology, September 2014, Pages 90–105
Abstract:
Coal is the bulwark of US energy production making up about a third of all energy produced and about half of its electricity generation capacity, over the last decade. Current energy policy in the Unites States assumes that there is at least a century of coal remaining within the nation that can be produced at the current rate of consumption. This assumption is based on the large reported coal reserves and resources. We show that, in coal producing regions and nations, historically reported reserves are generally overestimated by a substantial magnitude. We demonstrate that a similar situation currently exists with US reserves. We forecast future US coal production, in both raw tonnage and energy, using a multi-cyclic logistic model fit to historic production data. Robustness of the model is validated using production data from regions within the US, as well as outside, that have completed a full production cycle. Results from the model indicate maximum raw tonnage coal production will occur in a time window between the years 2009 and 2023, with 2010 being the most likely year of such a maximum. Similarly, energy production from coal will reach a maximum in the years between 2003 and 2018, with 2006 the most likely year of maximum occurrence. The estimated energy ultimate recoverable reserves (URR) from the logistic model is 2750 quadrillion BTU (2900 EJ) with 1070 quadrillion BTU (1130 EJ) yet to be mined, while the estimated raw tonnage URR is 124 billion short tons (112 Gt) with 52 billion short tons yet (47 Gt) to be mined. This latter value is merely a fifth of the long held estimate of 259 billion short tons (235 Gt).
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Uplift and seismicity driven by groundwater depletion in central California
Colin Amos et al.
Nature, 22 May 2014, Pages 483–486
Abstract:
Groundwater use in California’s San Joaquin Valley exceeds replenishment of the aquifer, leading to substantial diminution of this resource and rapid subsidence of the valley floor. The volume of groundwater lost over the past century and a half also represents a substantial reduction in mass and a large-scale unburdening of the lithosphere, with significant but unexplored potential impacts on crustal deformation and seismicity. Here we use vertical global positioning system measurements to show that a broad zone of rock uplift of up to 1–3 mm per year surrounds the southern San Joaquin Valley. The observed uplift matches well with predicted flexure from a simple elastic model of current rates of water-storage loss, most of which is caused by groundwater depletion. The height of the adjacent central Coast Ranges and the Sierra Nevada is strongly seasonal and peaks during the dry late summer and autumn, out of phase with uplift of the valley floor during wetter months. Our results suggest that long-term and late-summer flexural uplift of the Coast Ranges reduce the effective normal stress resolved on the San Andreas Fault. This process brings the fault closer to failure, thereby providing a viable mechanism for observed seasonality in microseismicity at Parkfield and potentially affecting long-term seismicity rates for fault systems adjacent to the valley. We also infer that the observed contemporary uplift of the southern Sierra Nevada previously attributed to tectonic or mantle-derived forces is partly a consequence of human-caused groundwater depletion.
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An Examination of the “Greening of Christianity” Thesis Among Americans, 1993–2010
John Clements, Chenyang Xiao & Aaron McCright
Journal for the Scientific Study of Religion, June 2014, Pages 373–391
Abstract:
Some environmental and religious scholars, religious leaders, and media figures have claimed there has been a “greening of Christianity” in the United States since the mid-1990s. Such a trend would be socially significant, as the integration of Christian values and environmental values may invigorate both domains. Using nationally representative data from the 1993 and 2010 General Social Surveys, we analyze how green self-identified Christians in the U.S. general public are in their pro-environmental attitudes, beliefs, and behaviors. Using structural equation modeling, we find no clear evidence of a greening of Christianity among rank-and-file Christians in the general public between 1993 and 2010. Indeed, the patterns of our results are quite similar to those from earlier decades, which documented that self-identified Christians reported lower levels of environmental concern than did non-Christians and nonreligious individuals. We did find evidence of some greening among evangelical Protestants, especially relative to mainline Protestants, between 1993 and 2010. We close by suggesting a few fruitful avenues for further research in this area via variable-oriented, case-oriented, and experimental studies and discussing some theoretical implications of our findings.
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Janie Shelton et al.
Environmental Health Perspectives, forthcoming
Objectives: To evaluate whether residential proximity to agricultural pesticides during pregnancy is associated with autism spectrum disorders (ASD) or developmental delay (DD) in the Childhood Autism Risks from Genetics and Environment (CHARGE) Study.
Methods: The CHARGE study is a population-based case-control study of ASD, developmental delay (DD), and typical development. For 970 participants, commercial pesticide application data from the California Pesticide Use Report (1997-2008) were linked to the addresses during pregnancy. Pounds of active ingredient applied for organophophates, organochlorines, pyrethroids, and carbamates were aggregated within 1.25km, 1.5km, and 1.75km buffer distances from the home. Multinomial logistic regression was used to estimate the odds ratio (OR) of exposure comparing confirmed cases of ASD (n = 486) or DD (n = 168) with typically developing referents (n = 316).
Results: Approximately one-third of CHARGE Study mothers lived, during pregnancy, within 1.5 km (just under one mile) of an agricultural pesticide application. Proximity to organophosphates at some point during gestation was associated with a 60% increased risk for ASD, higher for 3rd trimester exposures [OR = 2.0, 95% confidence interval (CI) = (1.1, 3.6)], and 2nd trimester chlorpyrifos applications: OR = 3.3 [95% CI = (1.5, 7.4)]. Children of mothers residing near pyrethroid insecticide applications just prior to conception or during 3rd trimester were at greater risk for both ASD and DD, with OR’s ranging from 1.7 to 2.3. Risk for DD was increased in those near carbamate applications, but no specific vulnerable period was identified.
Conclusions: This study of ASD strengthens the evidence linking neurodevelopmental disorders with gestational pesticide exposures, and particularly, organophosphates and provides novel results of ASD and DD associations with, respectively, pyrethroids and carbamates.
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Environmental Justice: Evidence from Superfund Cleanup Durations
Martin Burda & Matthew Harding
Journal of Economic Behavior & Organization, forthcoming
Abstract:
This paper investigates the extent to which cleanup durations at Superfund sites reflect demographic biases incongruent with the principles of Environmental Justice. We argue that the duration of cleanup, conditional on a large number of site characteristics, should be independent of the race and income profile of the neighborhood in which the site is located. Since the demographic composition of a neighborhood changes during the cleanup process, we explore whether cleanup durations are related to neighborhood demographics recorded at the time when the cleanup is initiated. We estimate a semiparametric Bayesian proportional hazard model, which also allows for unobserved site specific heterogeneity, and find that sites located in black, urban and lower educated neighborhoods were discriminated against at the beginning of the program but that the degree of bias diminished over time. Executive Order 12898 of 1994 appears to have re-prioritized resources for the faster cleanup of sites located in less wealthy neighborhoods. We do not find that the litigation process is an impediment in the cleanup process, and support the notion that community involvement plays an important role.
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Jayajit Chakraborty et al.
Risk Analysis, forthcoming
Abstract:
While environmental justice (EJ) research in the United States has focused primarily on the social distribution of chronic pollution risks, previous empirical studies have not analyzed disparities in exposure to both chronic (long-term) and acute (short-term) pollution in the same study area. Our article addresses this limitation though a case study that compares social inequities in exposure to chronic and acute pollution risks in the Greater Houston Metropolitan Statistical Area, Texas. The study integrates estimates of chronic cancer risk associated with ambient exposure to hazardous air pollutants from the Environmental Protection Agency's National-Scale Air Toxics Assessment (2005), hazardous chemical accidents from the National Response Center's Emergency Response Notification System (2007–2011), and sociodemographic characteristics from the American Community Survey (2007–2011). Statistical analyses are based on descriptive comparisons, bivariate correlations, and locally derived spatial regression models that account for spatial dependence in the data. Results indicate that neighborhoods with a higher percentage of Hispanic residents, lower percentage of homeowners, and higher income inequality are facing significantly greater exposure to both chronic and acute pollution risks. The non-Hispanic black percentage is significantly higher in neighborhoods with greater chronic cancer risk, but lower in areas exposed to acute pollution events. Households isolated by language — those highly likely to face evacuation problems during an actual chemical disaster — tend to reside in areas facing significantly greater exposure to high-impact acute events. Our findings emphasize the growing need to examine social inequities in exposure to both chronic and acute pollution risks in future EJ research and policy.
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Government Green Procurement Spillovers: Evidence from Municipal Building Policies in California
Timothy Simcoe & Michael Toffel
Harvard Working Paper, May 2014
Abstract:
We study how government green procurement policies influence private-sector demand for similar products. Specifically, we measure the impact of municipal policies requiring governments to construct green buildings on private-sector adoption of the US Green Building Council's Leadership in Energy and Environmental Design (LEED) standard. Using matching methods, panel data, and instrumental variables, we find that government procurement rules produce spillover effects that stimulate both private-sector adoption of the LEED standard and investments in green building expertise by local suppliers. These findings suggest that government procurement policies can accelerate the diffusion of new environmental standards that require coordinated complementary investments by various types of private adopter.
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Plastic debris in the open ocean
Andrés Cózar et al.
Proceedings of the National Academy of Sciences, forthcoming
Abstract:
There is a rising concern regarding the accumulation of floating plastic debris in the open ocean. However, the magnitude and the fate of this pollution are still open questions. Using data from the Malaspina 2010 circumnavigation, regional surveys, and previously published reports, we show a worldwide distribution of plastic on the surface of the open ocean, mostly accumulating in the convergence zones of each of the five subtropical gyres with comparable density. However, the global load of plastic on the open ocean surface was estimated to be on the order of tens of thousands of tons, far less than expected. Our observations of the size distribution of floating plastic debris point at important size-selective sinks removing millimeter-sized fragments of floating plastic on a large scale. This sink may involve a combination of fast nano-fragmentation of the microplastic into particles of microns or smaller, their transference to the ocean interior by food webs and ballasting processes, and processes yet to be discovered. Resolving the fate of the missing plastic debris is of fundamental importance to determine the nature and significance of the impacts of plastic pollution in the ocean.
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Air Pollution and Infant Mortality: A Natural Experiment from Power Plant Desulfurization
Simon Luechinger
Journal of Health Economics, forthcoming
Abstract:
The paper estimates the effect of SO2 pollution on infant mortality in Germany, 1985-2003. To avoid endogeneity problems, I exploit the natural experiment created by the mandated desulfurization at power plants and power plants’ location and prevailing wind directions, which together determine treatment intensity for counties. Estimates translate into an elasticity of 0.07-0.13 and the observed reduction in pollution implies an annual gain of 826-1460 infant lives. There is no evidence for disproportionate effects on neonatal mortality, but for an increase in the number of infants with comparatively low birth weight and length.
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Is economic rebalancing towards consumption “greener”? Evidence from visibility in China, 1984-2006
Zhigang Li et al.
Journal of Comparative Economics, forthcoming
Abstract:
The Chinese government has adopted a rebalancing strategy since 2011, shifting from an investment- to consumption-oriented growth model. An aim of this reform is for a “greener” development mode, but relevant empirical evidence is slim. In this study, we propose an innovative methodology to shed light on the environmental externalities of economic rebalancing. First, we use air visibility across China to reflect air quality during 1984-2006. Second, with the daily visibility data, we propose a weekend-effect regression model to difference out city-specific unobserved heterogeneity. Third, we approximate local consumption intensity with the portion of the residential electricity usage in the total electricity usage. To our surprise, the estimates suggest that the pollution intensity of consumption activities has not only been significant, but also exceeded that of production since the mid-1990s. Hence, rebalancing towards consumption is not necessarily more environmentally friendly according to the recent development experience of China.
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Does Foreign Environmental Policy Influence Domestic Innovation? Evidence from the Wind Industry
Antoine Dechezleprêtre & Matthieu Glachant
Environmental and Resource Economics, July 2014, Pages 391-413
Abstract:
This paper analyses the relative influence of domestic and foreign demand-pull policies in wind power across OECD countries on the rate of innovation in this technology. We use annual wind power generation to capture the stringency of the portfolio of demand-pull policies in place (e.g., guaranteed tariffs, investment and production tax credits), and patent data as an indicator of innovation activity. We find that wind technology improvements respond positively to policies both home and abroad, but the marginal effect of domestic policies is 12 times greater. The influence of foreign polices is reduced by barriers to technology diffusion, in particular lax intellectual property rights. Reducing such barriers therefore constitutes a powerful policy leverage for boosting environmental innovation globally.
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Do conservation auctions crowd out voluntary environmentally friendly activities?
Gerda Kits, Wiktor Adamowicz & Peter Boxall
Ecological Economics, September 2014, Pages 118–123
Abstract:
Research has shown that introducing external incentives to encourage pro-social behavior, such as monetary rewards or regulation, may crowd out voluntary pro-social activity. This has implications for the appropriate design and use of such incentive-based programs. This study investigates motivational crowding out in the case of conservation auctions, a relatively new tool that provides monetary incentives to encourage landowners to adopt environmentally friendly management practices. Our experimental evidence shows that the introduction and subsequent removal of a conservation auction significantly reduces voluntary provision of environmental quality (via monetary donations to an environmental charity), compared to a control group that does not experience an auction. We also attempt to examine some economic theories of behavior that explain this effect according to either individual motivations or social interactions, and our initial exploration finds that crowding out occurs regardless of whether or not participants have opportunities to interact with one another during the experiment.
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Can deep boreholes solve America׳s nuclear waste problem?
E.A. Bates et al.
Energy Policy, September 2014, Pages 186–189
Abstract:
The United States is in need of a new and more adaptive long-term strategy for spent nuclear fuel. In this communication, we outline the fundamental reasons why deep borehole disposal should receive more detailed investigation, alongside traditional shallow mined repositories. This potential solution is supported by advancing drilling technologies and an improving understanding of extremely long fluid residence times in deep bedrock. Radionuclide isolation is supported by verifiable and stable geologic barriers such as long transport distances to aquifers, low permeability, and reducing chemical conditions. The modular nature of implementing deep borehole disposal could offer unique programmatic and economic advantages. Experience with a pilot borehole program will be required to confirm the feasibility of drilling and emplacement operations, and key chemical and hydraulic conditions.
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Public Goods Provision in the Presence of Heterogeneous Green Preferences
Mark Jacobsen, Jacob LaRiviere & Michael Price
NBER Working Paper, June 2014
Abstract:
We develop a model of the private provision of public goods in a world where agents face convex costs of provision. Consonant with prior empirical evidence, we introduce preference heterogeneity by allowing a subset of agents to exhibit pro-social behavior that reflects "green" preferences. We use the model to compare different policies to promote private provision of public goods such as environmental quality or energy conservation. Counter to the standard result, we find that technology standards are frequently preferred to price-based instruments. Extending the model to allow for both benefit and cost heterogeneity, we find that policy choice depends on the correlation between the two forms of heterogeneity.
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Are anthropomorphic persuasive appeals effective? The role of the recipient's motivations
Kim-Pong Tam
British Journal of Social Psychology, forthcoming
Abstract:
Anthropomorphic persuasive appeals are prevalent. However, their effectiveness has not been well studied. The present research addresses this issue with two experiments in the context of environmental persuasion. It shows that anthropomorphic messages, relative to non-anthropomorphic ones, appear to motivate more conservation behaviour and elicit more favourable message responses only among recipients who have a strong need for effectance or social connection. Among recipients whose such need is weak, anthropomorphic appeals seem to backfire. These findings extend the research on motivation and persuasion and add evidence to the motivational bases of anthropomorphism. In addition, joining some recent studies, the present research highlights the implications of anthropomorphism of nature for environmental conservation efforts, and offers some practical suggestions for environmental persuasion.
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Civil unrest and the poaching of rhinos in the Kaziranga National Park, India
Adrian Lopes
Ecological Economics, July 2014, Pages 20–28
Abstract:
Civil unrest and political instability have been associated with endangered species poaching. This paper accounts for a period of civil unrest in Assam, India, which saw a marked increase in rhino poaching. Census data on the greater one-horned rhinoceros (Rhinoceros unicornis) in the Kaziranga National Park in Assam are used to estimate a population growth function. In calibrating the growth function's parameters the census data are used in conjunction with rhino poaching data. The rhino population and poaching data are used to econometrically estimate a harvest function. The relationship between civil unrest and rhino poaching is identified as positive and significant. The analysis factors in the probable relationships between poaching and several additional variables — including black market rhino horn prices, potential size of black markets, and anti-poaching efforts. These variables are seen to have the predicted associations with poaching, and help isolate the latter's relationship with civil unrest in the regression models. The goodness of fit between the data on rhino population and poaching and the estimates from regression models are studied.
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Convincing people to go green: Managing strategic action by minimising political talk
Janet Lorenzen
Environmental Politics, May/June 2014, Pages 454-472
Abstract:
At a time when the US public is deeply divided over how to address climate change, I investigate the way environmentally conscious actors attempt to recruit people to change their lifestyles and become more environmentally responsible. I draw on data from 45 interviews and participant observation with voluntary simplifiers, religious environmentalists, and green homeowners. Aware of the public’s aversion to discussing contentious issues such as climate change, informants focus on changing practices while downplaying political ideas and engagements. This is part of a pragmatic lifestyle change strategy which unites several persuasive techniques that include tailoring appeals to particular audiences, making ‘I feel’ statements, being role models, highlighting financial rewards such as the ‘win–win’ proposition, and the rare environmental appeal. I discuss how informants manipulate the lack of public political talk to their advantage in order to reach a wider audience. In this case, avoiding politics is not only active but strategic.