This October, emLab hosted the 21st Occasional Workshop in Environmental and Resource Economics at UC Santa Barbara and welcomed 95 participants for a conference at the Faculty Club on our beautiful campus.
Following the long-standing tradition established by founding fathers Charlie Kolstad and Robert Deacon, this year’s workshop featured cutting-edge research addressing pressing questions in natural resource and environmental economics. This year’s program featured twelve speakers, eight “egg-timer” presentations by PhD students and post-doctoral researchers, and a keynote address by Seema Jayachandra from Princeton University. With so many excellent presentations, we’ve summarized the key themes and insights from our twelve speakers, including highlights from the keynote address, below.
Paige Weber shares new research on the equity implications of environmental remediation projects.
The workshop began with Hannah Druckenmiller from CalTech, who presented her work on the economic impacts of land-use regulation around wetlands and waterways. Her key insight was to use variation in regulatory pressure, induced by changes in the interpretation of the Clean Water Act over time, to identify how regulation affects permitting and property values. While increases in development activity can provide economic benefits, one question that remains is how those benefits compare to the flood mitigation costs caused by wetland development.
Xinming Xu from the National University of Singapore presented her research demonstrating that globalization not only drives deforestation in Brazil (mostly to expand agriculture) but also leads to substantial negative health consequences as the loss of trees and forest cover reduces the forest’s ability to filter air pollution. The result is a large telecoupled health externality of trade: over the last two decades, more than 500,000 premature deaths are attributable to the increased air pollution exposure due to the loss of forest cover.
Continuing on the theme of long-range externalities, Joséphine Gantois, visiting from the University of British Columbia, shared her findings on how disruptions in desert locust monitoring caused by conflict in Sub-Saharan Africa lead to increased locust swarms. These swarms propagate beyond breeding areas, with significant negative effects on child health. In-utero exposure to locust swarms is linked to reduced height-for-age and a seven percentage point increase in stunting. These results underscore the tremendous value of locust monitoring systems, which exhibit a benefit-cost ratio exceeding three hundred.
Paige Weber from UC Berkeley presented new research on the equity implications of environmental remediation projects. Focusing specifically on changes in ambient air pollution across various neighborhoods in Atlanta induced by a shift of electricity production from coal to gas, the paper uses an equilibrium sorting model to examine the connection between equity-oriented, place-based environmental policy and residential location decisions.
Keynote Speaker
Seema Jayachandran from Princeton was the workshop’s keynote speaker. She discussed her groundbreaking work on evaluating and improving payments for ecosystem services (PES) in developing countries. Protecting the environment in developing nations is critical but often challenging to achieve in ways that do not further impoverish resource-dependent communities. PES holds promise for delivering both environmental benefits along and income support.
Dr. Jayachandran began with her work in Uganda, which was the first use of an randomized controlled trial (RCT) to evaluate payment for ecosystem services to reduce deforestation. Payments to landowners were highly effective, halving the rate of deforestation compared to controls. Using a carbon cost of $40, the program benefits were almost 15 times its cost, demonstrating the potential of PES to achieve significant environmental outcomes. She noted that even non-additional payments help reduce poverty, though the largest economic benefits accrue to those with the lowest costs of conservation.
She also shared insights from two recent papers that use RCTs to improve the efficiency of PES design. One evaluated a forest conservation PES program in Mexico, finding that requiring participants to enroll all their land reduced non-additionality and substantially improved program efficiency. Another study examined the timing of payments to reduce crop burning, showing that upfront payments, despite higher costs per hectare, increased compliance more effectively than standard PES, which did not significantly reduce crop burning.
In summary, Dr. Jayachandran demonstrated the use of randomized controlled trials to better understand how to design PES in developing country contexts to improve environmental outcomes.
Andy Holtgren of the University of Illinois presented his work evaluating the decision of firms to invest in lobbying and/or invest in Research and Development (R&D) in the face of environmental regulation. Firms could spend money to fight or soften environmental regulations and/or they could instead spend money on developing new production systems that comply with the proposed regulations. The benefits of these two approaches depend on market structure, and whether a firm can capture market share through the development of a new technology. To tackle this question he scoured seven thousand research articles to develop a novel dataset on discoveries by private researchers of potential damages caused by chemicals, as an arguably random shock that may induce new regulation. His findings indicate that firms increase lobbying in the short-term after these discoveries, but also make longer-term investments in R&D.
Tatyana Deryugina from the University of Illinois presented a paper that asks whether charitable donations act as insurance against harms from natural disasters. She motivates the paper noting that most US households are underinsured, and that poor and marginalized communities are particularly vulnerable to these disasters and least able to cope with the additional costs they impose. Charitable giving could either help mitigate these disparities, or, if wealthier donors are more likely to give to disasters that affect areas like theirs, it may exacerbate these inequalities. Using data from the American Red Cross on tornado-related donations from 1986–2016, she found that donations decrease with distance from the affected area and are lower when the impacted community is less affluent. Thus, her work suggests that charitable donations may not help mitigate inequalities in natural disaster relief.
Overlooking the campus lagoon, participants enjoyed Santa Barbara’s warm weather during one of the workshop’s coffee breaks.
Ryan Kellogg from the University of Chicago presented a provoking paper on the “end of oil” examining the implications of global demand for oil approaching zero in the future. The paper demonstrates the tension between “green paradox” incentives to accelerate oil extraction in the short-term versus disinvestment effects that would tend to reduce oil production. Using a model he developed that incorporates both the green paradox and disinvestment effects, Kellogg found that, under empirically supported conditions, the disinvestment effect outweighs the green paradox, unless producers have extremely short investment horizons and low discount rates.
The workshop came to a close with Marshall Burke from Stanford University showing his work on climate change adaptation, here represented by observed reductions in climate sensitivity over time. Using diverse global data on mortality, agriculture, conflict, economic output, and disaster damages, the paper reports limited evidence of adaptation, with climate sensitivities largely unchanged, modestly reduced, or even increasing in many regions. More broadly, these findings suggest that on net, the effects of past adaptations have not been successful in reducing climate impacts in aggregate.
As organizers, researchers, and participants at the 21st Occasional Workshop in Environmental and Resource Economics, we came away energized by the fresh ideas and vibrant discussions that took place over the two days that we gathered at the UC Santa Barbara campus. The workshop highlighted how our community continues to push boundaries in addressing critical environmental challenges – from climate adaptation to environmental justice and beyond. Whether through formal presentations or informal conversations over coffee, these gatherings remind us of the power of bringing people together. We look forward to continuing these vital conversations when we occasionally meet again.
