Rising humid heat poses significant risks to health and welfare. Using high-resolution meteorological data linked to longitudinal survey data from China, we examine relationships between humid heat measured by wet-bulb temperature (WBT) and self-reported physical and mental health. Higher WBT is associated with greater physical discomfort, concentrated in gastrointestinal and cardiovascular symptoms, and higher psychological distress. Relative to dry-bulb temperature, WBT exhibits a more robust relationship with mental health. These responses are largest among individuals with chronic conditions and low-income groups. Elevated WBT also triggers behavioral adjustments, including reduced work hours and exercise alongside increased alcohol and tobacco use. These patterns highlight welfare costs extending beyond clinical endpoints and underscore the importance of accounting for humidity in assessments of climate impacts on health.
This paper explores heterogeneous individual valuations of an important amenity, climate mildness, using a traditional Rosen-Roback empirical framework. It does so by including interaction terms between the amenity and worker characteristics in an hedonic wage regression that also includes a housing-price measure. The results suggest that non-young workers (those in the mid-age and old groups) value a mild climate more than do young workers, matching the usual view that the tolerance for cold weather declines with age. The findings also suggest that, like their highly educated counterparts, workers with low education levels also highly value a mild climate, with workers in the middle range of education having a lower valuation. These findings, which contradict the view that only better-off individuals care about amenities, could reflect the lower burden in mild weather of the manual work done by the less educated. In addition to presenting these empirical findings, the paper further contributes by presenting new analytics for the Rosen-Roback model in a setting with individual heterogeneity.
Climate change poses substantial threats capable of triggering a drop in the renewability and quality of natural resources. In this paper, we extend standard stock-recruitment models to examine how the risk of this environmental event affects the tragedy of the commons associated with decentralized harvest decisions made by players exploiting a common pool renewable resource. We use general functional forms and allow for endogenous or exogenous hazard rates. Our analysis indicates that anticipating this environmental event critically affects harvest incentives. For instance, linear strategies may not hold in equilibrium when the hazard is stock dependent. The representative player can increase extraction today in response to a higher risk of decreased both resource renewability and quality. We find conditions under which environmental risk, in addition to inducing conservation, mitigates the tragedy of the commons. Calibrating our model to the Baltic Cod fishery, we find that players’ strategic responses to the estimated endogenous regime shift risk may reverse the tragedy of the commons.
This paper introduces the Comparative Travel Expenditure (CTE) method, a novel approach to derive exchange values for recreation-related ecosystem services (RES) compliant with the System of Environmental Economic Accounting - Ecosystem Accounting framework. Our approach builds upon the environmental economic literature by modifying the established travel-cost method in order to only consider market transactions to estimate the expenditures directly attributable to RES. By comparing the recreation demand of two sites with different ecosystem conditions, the CTE method allows us to estimate the difference in price driven by such differences in ecosystem conditions, thereby isolating the exchange value of RES for accounting purposes. To illustrate the CTE method, we conduct an empirical estimation of the RES exchange value of an Italian marine protected area, estimating that 66
We present a valuation framework for measuring the non-market net operating surplus associated with threatened wild species preservation for monetary ecosystem accounting. We use the Simulated Exchange Value (SEV) method, which estimates the maximum benefit that could be internalized in a hypothetical market using the demand simulated from a choice experiment, a given market supply, and an assumed market structure. The choice experiment estimates willingness to pay (WTP), in addition to current tax-funded costs, for achieving different stock levels of wild species across threat categories defined by the International Union for Conservation of Nature Red List. We apply this framework to the valuation of threatened waterbird species preservation in the coastal wetlands of the southwestern Iberian Peninsula. The results show that WTP increases as the number of threatened species decreases, with the critically endangered species generating the highest WTP and no statistically significant differences between vulnerable and endangered species. Based on our preferred model, we estimate a SEV of the net operating surplus of €2,850 per hectare per year for the current stock levels of threatened waterbird species. The equivalent variation estimated for the same stock level is €4,108 per hectare per year.
The transition to carbon-neutral residential heating poses extraordinary policy challenges to societies in Europe and beyond. In this paper, we study the electoral consequences of an amendment to the German Building Energy Act (GEG) aimed at phasing-out fossil-based heating systems. We use granular building stock data to approximate heterogeneity in household compliance costs and apply difference-in-differences and triple difference models to estimate its impacts on vote shares at the municipal level. For the state elections in Bavaria and Hesse, we find relative gains for the far-right (+2.4 pp) and conservative opposition parties (+6.5 pp) and losses for the incumbent federal government parties (−2.9 pp) in the baseline specification of our model. For the latter two, the effects are more pronounced in rural municipalities. These findings highlight the importance of holistic climate policy approaches that account for salient and heterogeneous costs to mitigate political backlash.
This study evaluates the impact of the Pilot Free Trade Zones (PFTZs) on the carbon emissions of enterprises located within the zones. By manually identifying PFTZs’ boundaries and employing a spatial regression discontinuity (SRD) design, we find that the establishment of the PFTZs significantly reduces the carbon emission intensity of enterprises within the zones. This conclusion remains valid across a series of robustness tests. Mechanism analysis reveals that the PFTZs drives emission reductions by intensifying market competition, stimulating green technology innovation, and alleviating financing constraints. Furthermore, heterogeneity analyses indicate that these effects are more pronounced in heavily polluting industries, technology-intensive enterprises, non-state-owned enterprises, and areas with a larger scale of construction. This study provides a vital theoretical basis for China’s green and high-quality development strategies in the current context of carbon reduction.
We estimate the impact of catastrophic wildfires on suicide. Leveraging an eight-year panel of county-by-month restricted-use mortality data for California, we find that catastrophic wildfires that destroy at least 2
Hydrogeological disasters are an increasingly important source of fiscal stress for local governments, yet evidence on how municipal budgets adjust to these events remains limited. This paper estimates the fiscal effects of hydrogeological State of Emergency declarations on Italian municipal budgets over 2016–2022, exploiting their staggered timing across municipalities. We find that treated municipalities increase both total revenues and total expenditures after first exposure. The response is primarily investment-led, with capital expenditures accounting for the largest estimated component of the adjustment while current expenditures remain broadly unchanged. The largest changes in expenditure composition involve civil protection activities and sustainable development. On the revenue side, the adjustment is driven mainly by capital revenues and intergovernmental transfers. We further examine municipal heterogeneity using an ex-ante measure of fiscal resilience based on debt-service burden and tax autonomy. Municipalities with lower debt-service burden display sharper immediate fiscal adjustments, whereas tax autonomy matters more for sustaining the fiscal response over time. The weakest responses are observed among municipalities combining high debt-service burden with weak tax autonomy. Overall, the evidence suggests that hydrogeological emergencies trigger a structured, investment-led fiscal response, but that pre-existing fiscal conditions shape local governments’ capacity to absorb and manage these disaster-related fiscal pressures.
In March 2020, Luxembourg became the first country to make public transport free. We use this unique setting to evaluate the policy’s impact on transport emissions using a synthetic difference-in-differences framework. We use spatial emissions data to construct a panel of NUTS 2 regions in the EU from 2016 to 2022. We estimate an average reduction of 5.9
In regions with low soil fertility, smallholder farmers often clear forest to sustain agricultural yields. This pattern becomes more problematic where forest regrowth is slow, contributing to local forest loss and global environmental challenges such as climate change and biodiversity decline. This paper presents findings from a framed field experiment that examines how different types of monetary incentives affect forest-clearing decisions in northern Namibia, a semi-arid region with negligible forest regrowth. We implemented a common-pool resource game with 518 smallholder farmers across 25 villages, in which a forest stock declines dynamically based on participants’ clearing decisions, without immediate regrowth. The game spans three periods: a baseline without incentives, an intervention period where participants receive either individual rewards, collective rewards, an individual fee, or no incentives (control group), and a post-incentive phase. This setup allows us to assess both the immediate effects of incentives and their persistence after incentive removal. All incentive types reduce clearing compared to the baseline, but not significantly more than in the control condition, where clearing also declined – an unexpected trend likely linked to features of the dynamic game design. Incentive effects largely dissipate after removal, with no strong evidence of lasting motivational crowding-in or crowding-out. Overall, our results suggest that moderate payments may be insufficient to sustain cooperation in persistent resource dilemmas. More broadly, they highlight the importance of multifaceted analysis including control conditions and careful experimental framing in field-laboratory studies, coupled with caution in generalizing findings to other settings or policy applications.
We present a simple model showing how income inequality and the income elasticity of demand jointly shape the tax progressivity of indirect taxes, with rising inequality increasing the regressivity of taxes on necessities. We test the model’s predictions by analyzing the Swedish carbon tax on transport fuel. We find that the tax becomes increasingly regressive over time, closely tracking rising income inequality. We also show that the relative incidence shifts from regressive to progressive when using annual expenditure rather than annual income as the welfare measure, as expenditure is more evenly distributed. A cross-country analysis of gasoline taxes in high-income nations further supports our findings, establishing a strong correlation between higher inequality and greater regressivity. Our model helps policymakers identify when complementary redistributive measures such as lump-sum transfers may become necessary.
This study examines an under-explored implication of population ageing: its relationship with environmental outcomes at the country level and environmental attitudes at the individual level. The analysis introduces a novel classification of environmental outcomes, distinguishing between action-requiring and nature-concerning dimensions based on the degree of civic engagement necessary for their realisation. Using panel data from a broad set of countries over the period 1995–2018, population ageing is shown to be associated with improvements in environmental outcomes that require limited civic engagement, while no systematic relationship is observed for outcomes that rely on active public participation. Complementary evidence from individual-level survey data for 2005–2016 indicates that ageing societies exhibit lower levels of environmental engagement, without a corresponding decline in underlying environmental concern. The findings contribute to the literature on demographic change and environmental performance by highlighting the role of civic engagement as a mediating mechanism and suggest that ageing societies may face specific challenges in sustaining participatory forms of environmental action.
Residential energy use is a major contributor to total energy consumption and CO2 emissions, and energy costs can take up high shares of household spending. In this context, we make three contributions to the literature. First, using a discrete choice experiment with 1,389 prospective homebuyers in Sweden, we investigate how homebuyers account for energy efficiency of buildings compared to other attributes when looking for a new home. Second, we elicit forecasts from a sample of 252 realtors whom we ask to predict homebuyers’ preferences, allowing us to shed light on the role these important mediators play regarding energy efficiency in the housing market. Third, we estimate how providing prior information on homebuyers’ choices affects realtors’ forecasting accuracy. For homebuyers, we find that energy efficiency ranks low overall. Realtors’ forecasting accuracy is lower for the energy efficiency attribute. Providing realtors with more prior information has sizeable positive effects on forecasting accuracy, and information also affects self-reported difficulty of and confidence in the forecasts.
We examine the timing of timber harvesting, when neighboring forest stands interact through windthrow risk. Positive adjacency externality stems from the sheltering effect of tall trees whereas negative externality stems from a windthrow-prone border created by clear felling or wind damage. We model wind damages as catastrophic, which call for immediate salvage harvest and regeneration. We augment previous optimal rotation results by extending the analysis to a dynamic harvest policy, where harvest age depends on the age of the neighboring stand. We examine both an efficient equilibrium and an inefficient noncooperative Markov perfect equilibrium. In the efficient equilibrium, where the externality is internalized, harvest is delayed when the neighboring stand is mature. This delay provides shelter by postponing harvest-created border risks. In the noncooperative equilibrium, the shelter is not provided, yet the harvest age adapts to increased risk-levels due to the border effect. We numerically test the magnitude of the border effect under various model assumptions and find that pricing the carbon externality makes the harvest policy more responsive to the adjacency externality.
Pigouvian taxes are often unpopular among the general public. We test the effectiveness of pro-tax social information in increasing support for such taxes. In a lab experiment that involves a market game with externalities, we provide subjects with information about other participants’ views about the “right thing to do” (voting, or not, for the tax policy). We also elicit personal, normative, and positive beliefs. Our findings demonstrate a causal effect of social information provision on subjects’ support for the tax, and that subjects’ changes in beliefs is a causal mechanism through which this increased support for the tax is made possible. We therefore highlight the important role of beliefs in voting behaviors and the acceptability of Pigouvian taxes.
This study evaluates the effectiveness of separate biowaste collection implemented by French local authorities by assessing its impact on the quantities of residual household waste collected per capita. Using a staggered Difference-in-Differences approach, we first examine the dynamic effect of biowaste separation policies on residual household waste. We then explore the heterogeneity of this effect across various economic and sociodemographic contexts, as well as under different waste pricing systems. Our findings reveal that, in the period following adoption, there was a significant average reduction of approximately 19.56 kg per capita in residual household waste among intermunicipal entities that implemented separate biowaste collection. However, this initial reduction is not sustained over time. The heterogeneity analysis shows that low-density areas and intermunicipal entities with limited tourist accommodations experience larger reductions in residual household waste after implementing separate biowaste collection, compared to high-density and high-tourism areas. Furthermore, our results suggest that incentive-based pricing systems significantly contribute to reducing residual household waste. Based on these results, we suggest ways to improve local public waste management policies.
We study the impact of a policy mix, consisting of an emissions tax and an R D subsidy on both abatement technology improvement (R D) and technology adoption. In an upstream industry with market power (monopoly or duopoly) an improved abatement technology is developed for polluting downstream firms that are subject to the aforementioned policy mix. These firms can adopt the new technology, which has different value for each firm, leading to product differentiation. First, we study the optimal policy, which includes output subsidies. Next, we examine second-best policy mixes, such as emission taxes and R D expenditure subsidies, for different market forms. We identify novel aspects of these policy mixes. For instance, in a monopoly, the optimal second-best policy must account for the intra-marginal benefits of adopting firms. In a duopoly, the policy mix must also address strategic under- or overinvestment by upstream technology developers.
This paper investigates how firm heterogeneity affects the transmission of macroeconomic shocks and the volatility of key macroeconomic variables under environmental regulation. To address this question, we compare a representative-agent (Rep) benchmark to a heterogeneous-firm (Het) model subject to the same aggregate shocks and operate under the same cap-and-trade regime. The findings are as follows. First, macroeconomic volatility is higher in the presence of firm heterogeneity relative to a representative-agent counterpart. This result holds regardless of the origin of the macroeconomic shock considered. Second, the investment decisions of the heterogeneous firms are nonlinear and exhibit stronger reactions to shocks, particularly for smaller firms with lower capital and less efficiency in abatement activities. Third, a carbon pricing shock causes a more significant decline in investment and a rapid increase in abatement costs due to higher marginal emissions costs than the analogous Rep counterpart. The key micro-parameters are estimated consistently with data of regulated firms under the EU Emissions Trading System (EU ETS).
Clean water is one of the primary goals of the EPA and environmental regulatory agencies across the country. Over the agency’s long history, hundreds of EPA regulatory programs have tried to improve water quality. However, very few programs focus on the role of enforcement. The EPA’s Priority Sector Program increased enforcement, along with regulatory monitoring, against certain industrial manufacturing sectors in an attempt to reduce water pollution. The purpose of this paper is to examine the impact of the Priority Sector Program by analyzing its effect on the chemical manufacturing industry as it pertains to improving compliance with discharge limits. Using a difference-in-differences framework and event studies, we find that inclusion of chemical manufacturing facilities in the Significant Sector tier of the Priority Sector Program was effective at reducing discharges and improving compliance, whereas inclusion in the more stringent Priority Sector tier did not significantly improve compliance. To assess the causal channels, we examine whether the Priority Sector program prompted the EPA regional offices to conduct more inspections, take more enforcement actions, and impose bigger sanctions.
