What are the effects of supply-side climate policies in the oil market? We use global company-level data to estimate the impact of 84 reforms of production taxes between 2000 and 2019 on oil production, exploration, and discoveries. We find that higher taxes primarily reduce companies' exploration expenditures and oil discoveries, and also reduce short-term production of unconventional oil. We then quantify the implications for the oil market using a short- and medium-term dynamic model extending until the end of the century. Imposing a global climate royalty surcharge of 20 percentage points on oil producers reduces average annual emissions from oil by 5-7% in the first 5 years, and 9-20% in the medium term. If only OECD countries adopt this policy, 47-73% of the total emission reductions would be offset by increased production in non-OECD countries in the medium term.

Through the federal cash transfer program Bolsa Verde (BV), extremely poor households in remote protected areas (PAs) of the Brazilian Amazon receive cash conditional on maintaining the forest cover in their protected areas. Using high-resolution spatial data for 2005-2015 and differencein-differences estimates, we find that the program reduces deforestation and the size of large deforestation plots. Measured as a share of the protected area, deforestation decreases by 0.08 percentage points when BV coverage increases from zero to its average level of 40% of PA households. This corresponds to one third of the post-program mean in comparable untreated areas. The effects are concentrated in unpopulated parts of PAs and outside private properties. Satellite-based alarm and enforcement data from Brazil further show that fines are issued at greater distances from alarm locations in BV areas. Together, these results are consistent with BV complementing formal enforcement through local monitoring and deterring large-scale deforestation unlikely to originate from recipients themselves. A back-of-the-envelope calculation suggests that the resulting avoided CO2 emissions were achieved at relatively low abatement costs.

Multinational investment is vital for African growth, yet it drives higher rates of forest loss than local industry. Researchers now suggest that home-country laws should hold global firms accountable for their environmental footprint abroad.

We present quasi-experimental evidence that the timing of tax deductions matters for investments. Using firm-level data for Norway and the UK over 1995-2015, we estimate the effects of introducing immediate tax refunds paid out in cash in the Norwegian petroleum sector. We find a 63% increase in exploration investment and a 23% increase in the number of oil and gas discoveries. Consistent with the presence of financial frictions, the cash injection led oil companies to invest in projects that were economically profitable on average. The response was strongest among the firms most likely to be financially constrained. In sum, our empirical findings support the hypothesis that the timing of resource rent taxes matters when firms face financial frictions.

In honor of the 125th year of The Scandinavian Journal of Economics, this paper highlights some of the influential research published here in the last 25 years, considers current trends in the field, and describes a view of the future of this journal in the overall economics research ecosystem.

This comprehensive report delves into the economic policy responses of the Nordic countries amidst the tumultuous period marked by the COVID-19 pandemic, the subsequent recovery phase, the energy crisis, and inflation spanning from 2020 to 2023. It provides a critical examination of the macroeconomic strategies employed during these challenging times, highlighting the lessons learned and the effectiveness of different policies. The report raises pivotal questions regarding the outcomes of these policies, their impact on the Nordic economies, and the lessons that these countries can glean from each other's experiences. Key Findings and Highlights: Fiscal Support Measures: The report evaluates the unprecedented fiscal support measures implemented by the Nordic countries during the pandemic. It discusses how these measures, while stabilizing the economies, resulted in overgenerous subsidies to firms, indicating areas for future refinement. Job Retention Schemes: An analysis of job retention schemes reveals their critical role in preserving employment during the pandemic. The report suggests that while effective, these schemes should be designed to avoid hindering necessary structural changes within the economies. Fiscal Policy Challenges: The need for fiscal policies that can stabilize the business cycle, provide household income loss insurance, allow for public investment, and address the needs of an ageing population is emphasized. It argues for debt financing beyond current limits to meet urgent investment needs. Energy Crisis and Green Transition: The energy crisis is examined as a case study in balancing immediate relief with long-term sustainability goals. The report discusses the importance of allowing price mechanisms to encourage the green transition while providing timely support to consumers and businesses. Overall the report underscores the importance of policy adaptability, advocating for economic policies that can swiftly respond to unforeseen crises without compromising long-term fiscal sustainability. It calls for targeted support measures that aid vulnerable households and firms during economic downturns without impeding structural adjustments. Furthermore, it emphasizes the necessity for adequate resources towards active labour market policies, including vocational training and subsidized employment. Facing intricate trade-offs between maintaining robust economic policy frameworks and adapting to new challenges, the Nordic countries stand at a crossroads. The report advocates for a vibrant exchange of policy insights and impacts, stressing the need for adaptable, targeted, and well-resourced economic policies. This report is essential reading for policymakers, economists, and anyone interested in the complexities of economic policy-making in the face of multiple crises. It offers a thorough analysis of the Nordic experience, providing valuable lessons for both the region and beyond.

Petroleum companies look for oil and gas in some of the most remote and biodiverse forested areas on the planet. To study how local environmental footprints vary across countries and companies, we combine global company-level geo-coded data on oil drilling with high resolution data on forest loss. We find that oil wells drilled in countries with better public governance, measured by democracy scores, are associated with substantially lower forest loss in the period after drilling. In contrast, we do not find evidence of less forest clearance among companies with presumptively ‘better’ corporate governance practices, such as major international companies, publicly listed companies, or members of an industry association committed to high environmental standards. These results do not support a “pollution halo” effect, whereby companies might bring better environmental practices with them, exceeding domestic environmental standards.

Increasing international agricultural commodity prices create pressure on tropical forests. We study the effectiveness of three regulatory policies implemented by Brazil in reducing this pressure: blacklisting of municipalities, the Soy Moratorium, and conservation zones. We use a triple difference approach that combines international agricultural commodity prices with the policies across three million km2 in the Brazilian Amazon. We find that the blacklisting program is effective, as it reduces deforestation related to the prices by 40%. The Soy Moratorium made deforestation in exposed municipalities more sensitive to non-soy prices, in line with crop substitution. Conservation zones amplify the effect of prices on deforestation on the remaining unprotected land, consistent with reduced land supply. Our results highlight that the effect of environmental regulation depends on the economic pressure to use natural resources.

Providing scientific subsidies for public policies is a compromise that is beyond the boundaries created by the academic universe, requiring scientists to respond to the challenges posed by increasingly complex societies, both socially and environmentally. Considering this, the objective of this work was to build a pilot project for rapid assessment of Tefé National Forest (TNF) land use zoning and evaluate its relevance as a tool to support actions and influence discussions in protected area management councils. The assessment considered remote sensing data on deforestation and fire from 2005 to 2015. Deforestation maps (PRODES-INPE) and active fire (MODIS) information were overlapped with TNF land use zoning. Although National Forest, in general, has its land use rules provided by law, each protected area defines on its Management Plan their own land use zoning, with specific rules. The study showed that in 2015, 97% of TNF was covered by forest, and although no deforestation was recorded in the same year, the number of active fires was 1.8 times higher than the average from 2005 to 2014. This demonstrates the vulnerability of this area to the extreme drought which affected the region this year. The Population Zone, where 44% of the TNF population lives, recorded the highest rates of deforestation and fire. The Preservation Zone, on the other hand, showed to be fulfilling its function, presenting no active fires and only one deforestation event during the whole analyzed period. These results were presented at the 20th TNF Council Meeting, in 2017. The TNF manager pointed out the great importance of spatial and temporal diagnoses, which can exert in prioritize actions to tackle specific problems in most threatened zones. Community leaders participating in the meeting contributed to the completion of the results with in situ day-to-day reports, offering hypotheses for some phenomena observed on the assessment, such as the deforestation observed in 2010. After that, it became clear that actions directly focused on the Population Zone, and mainly related to the use of fire in years of extreme drought, can improve the conservation outcome for this protected area. Integrated socio-environmental diagnosis, such as this pilot project, can be an important tool, allowing a broader version of the monitoring strategies.

Investment promotion is a form of industrial policy that aims to increase inflows of foreign direct investments (FDI). Investment promotion consists of image building, investment generation, investor aftercare, and policy advocacy. Through these four activities, national and subnational investment promotion agencies (IPAs) seek to reduce information asymmetries, red tape, and coordination costs that create frictions for international investors. Nearly all countries currently have IPAs. The empirical literature that has tested the impact of investment promotion suggests that it can increase inflows of FDI, especially if information asymmetries and red tape is likely to be present and if the IPA subscribes to high-quality standards.

We estimate the effect of giant oil and gas discoveries on bilateral real exchange rates. The size and plausibly exogenous timing of such discoveries make them ideal for identifying the effects of an anticipated resource boom on prices. We find that a giant discovery with the value of a country's GDP increases the real exchange rate by 14% within 10 years following the discovery. The appreciation is nearly exclusively driven by an appreciation of the prices of non-tradable goods. We show that these empirical results are qualitatively and quantitatively in line with a calibrated model with forward looking behaviour and Dutch disease dynamics.

This paper studies the impact of speed limits on local air pollution using a series of datespecific speed limit reductions in Oslo over the 2004-2011 period. We find that lowering the speed limit from 80 to 60 km/h reduces travel speed by 5.8 km/h. However, we find no evidence of reduced air pollution as measured next to the treated roads. Our estimates suggest an annual time loss of the speed limit reductions of 55 USD per affected vehicle. Our findings imply that policy makers need to consider other actions than speed limit reductions to improve local air quality.

We provide evidence that institutions have a strong influence over where oil and gas exploration takes place. We utilise a global data set on the location of exploration wells and national borders. This allows for a regression discontinuity design with the identifying assumption that the position of borders was determined independently of geology. In order to break potential simultaneity between borders, institutions, and activities in the oil sector, we focus on drilling that occurred after the formation of borders and institutions. Our sample covers 88 countries over the 1966–2010 period. At borders, we estimate more than twice as much drilling on the side with better institutional quality. Subsample analyses reveal effects of institutions on exploration drilling in both developing and high income countries, as well as across three types of operating companies. We find that the supermajor international oil companies are particularly sensitive to institutional quality in developing countries. Our findings are consistent with the view that institutions shape both exploration companies’ incentives to invest in drilling and host countries’ supply of drilling opportunities.

This study argues that countries can use industrial policy to change their comparative advantage. It focuses on sector-specific FDI promotion efforts undertaken by 73 developing countries during 1984-2006. It finds that products belonging to sectors targeted by investment promotion efforts experience an increase in exports and revealed comparative advantage. This effect increases with the time targeting is in place and is larger for capital-intensive products and products requiring relationship-specific investments. The findings are robust to controlling for arbitrary country-sector-specific shocks that might have affected the choice of a particular priority sector by a given country in a given year.

Oil and gas windfalls may lead to the Dutch disease, that is, the crowding out of the manufacturing sector due to rising wages when labor is drawn to the expanding sectors. In this paper, we exploit the fact that oil and gas discoveries contain an element of luck as well as oil price fluctuations to capture exogenous variation in oil and gas windfalls across Indonesia and identify their effects on manufacturing firms. We find that oil and gas windfalls on average cause wages as well as firms' labor productivity, output, and employment to increase, while product unit values and exit rates are unaffected. Heterogeneity analysis reveals that the least productive firms are more likely to exit, and surviving low-productivity firms see relatively large expansions in output and labor productivity, while high-productivity firms see relatively high expansions in employment.

To what extent can trends in deforestation be explained by the production, consumption and export of petroleum? The so-called Dutch disease describes how countries exporting natural resources experience a booming sector, leading to real exchange rate appreciation and a decline in the competitiveness of the traded sector. This can squeeze the size of the traded sector, while the resource sector and non-traded sectors expand. We investigate to what extent such a mechanism might also lead to squeezing of the forest-intensive traded sectors such as agricultural and forestry, ultimately leading to a contraction in pressure on the forest frontier. In other words, we test how much oil exports ‘crowd-out’ deforestation.

In this study, we use global datasets to estimate the impacts of mining on forest loss. Comparing forest loss around mines with forest loss around random forest spots, we estimate that an area almost twice the size of Austria has been cleared due to mines worldwide. The extent of forest loss is decreasing with the distance to the mine, but there is significant forest loss even 15 km from the mines. This finding is consistent with mining activities occupying previously forested land directly. We also demonstrate that increased commodity prices lead to a reduction in forest loss. This is particularly true at roads in the vicinity of mines in lowincome countries. This finding is consistent with an indirect effect of mining on forests, as a booming mine drags labour out from land intensive-industries and into mining. While mining pose local environmental threats to forests, resulting local economic development and structural change can reduce the pressure on the forest.

This paper studies Brazil’s Bolsa Verde program, which has a unique incentive structure. Instead of paying land owners or forest managers, the program pays extremely poor households for forest conservation evaluated at the regional level. We use a difference-in-differences approach to identify the environmental impact of the program, and find that deforestation in treated areas fell by 44-53 percent of the counterfactual forest loss. These program benefits in terms of reductions in carbon dioxide emissions are valued at approximately USD 335 million between 2011 and 2015, about 3 times the program costs. Additionally, we find that the treatment effects increase in the number of beneficiaries and are driven by action on non-private properties in the treated areas. In particular, the program increases the number of fines, especially in areas far away from where satellite alarms could inform the authorities about illegal deforestation. Together, these findings suggest that the BV program reduced deforestation by providing poor households with incentives to monitor and report on deforestation activities in their areas of residency. (JEL I38, O13, Q23, Q28, Q56) ∗The project is funded by the Research Council of Norway (project number 230860). The views expressed in this paper are those of the authors and do not necessarily reflect those of the Hong Kong Monetary Authority. We thank Andre de Lima for his expert assistance with maps and spatial data. We also thank Kelsey Jack, Katharine Sims, Eduardo Souza-Rodrigues, Itziar Lazkano, and participants at various conferences and seminars for very helpful comments and discussions. Remaining potential errors are our own. †Research Department, The Hong Kong Monetary Authority; Corresponding author: pywong@hkma.gov.hk ‡Department of Economics, Norwegian School of Economics §Department of Political Economy, King’s College London ¶National Center for Monitoring and Early Warning of Natural Disasters (CEMADEN) ‖National Institute for Space Research (INPE)

Po Yin Wong∗ †1, Torfinn Harding1, Karlygash Kuralbayeva2, Samantha DeMartino3, Andre de Lima4 and Liana O. Anderson 5 1Department of Economics, NHH Norwegian School of Economics 22Department of Geography and Environment, London School of Economics 3World Bank Group 4Department of Geographical Sciences, Univeresity of Maryland 5National Center for Monitoring and Early Warning of Natural Disasters (CEMADEN)