Presentations begin at 12pm and conclude at 1:10pm in Giannini Hall, room 248.
Fall 2017 schedule
27 September 2017
Presenter: Philipp Massier (with Benjamin J. Lutz and Kathrine von Graevenitz)
Title: Prices as Climate Policy: Assessing the Causal Effect of Electricity Prices on German Manufacturing Plants
Abstract: Climate policies often result in higher electricity prices through the internalization of external costs. We shed light on how plants in the German manufacturing sector react to such electricity price changes. Little is known about the causal impact of electricity prices on individual plant performance as electricity prices are typically endogenous. We match official production census data on the German manufacturing sector with data on individual electricity prices and grid charges for the first time. While the data is very detailed and contains a lot of spatial variation, assignment of an individual electricity tariff to a plant cannot be observed. However, the grid operator is observed through the plant’s location. Thus, electricity demand elasticities are identified based on panel IV regressions using the arguably exogenous regulated grid charges as an instrument to correct for potential measurement error and endogeneity in electricity prices. Grid charges in Germany are not based on congestion pricing like in some US electricity markets. They are determined based on incentive regulation of the grid operator.
Our main estimates show an electricity own price elasticity of -1.5. With the help of subsample analyses we can show that there is heterogeneity in the different manufacturing industries. Further, we find no contemporaneous effects on investments, revenues or employment. There is some suggestive evidence that plants respond to rising electricity prices by increasing their own electricity generation. By doing so, they can avoid many of the levies charged in Germany, e.g. the renewable energy surcharge or grid charges. These charges are mainly motivated in covering the costs of the renewable energy expansion and grid operations. However, to the extent that these charges are also intended to induce energy efficiency such avoidance behavior is detrimental to the efficacy of the regulation.
25 October 2017
Presenter: Danamona Andrianarimanana
08 November 2017
Presenter: Ed Rubin
Presenter: Matt Woerman
13 September 2017
Presenter: Tamma Carleton (with Solomon Hsiang, Michael Greenstone, Amir Jina, Robert Kopp, Ishan Nath, James Rising, Ashwin Rode, Samuel Seo, Arvid Viaene, Jiacan Yuan, Alice Zhang)
Title: Global mortality consequences of climate change accounting for adaptation costs and benefits
Abstract: Empirically-based and plausibly causal estimates of the damages of climate change are greatly needed to inform rapidly developing global and local climate policies. To accurately reflect the costs of climate change, it is essential to estimate how much populations will adapt to a changing climate, yet adaptation remains one of the least understood aspects of social responses to climate. In this paper, we develop and implement a novel methodology to estimate climate damages globally that paves the way for the first data-driven, global social cost of carbon in which adaptation and its costs are empirically identified. We apply this method to mortality — likely to be one of the largest losses associated with climate change. We assemble comprehensive sub-national panel data on mortality in 41 countries that account for 56% of the world’s population, and combine them with high resolution daily climate data to flexibly estimate the causal effect of temperature on mortality. Consistent with previous studies, we find the impacts of temperature on mortality have a U-shaped response; both hot days and cold days cause excess mortality. However, this average response obscures substantial heterogeneity, as populations are differentially adapted to extreme temperatures. We derive spatio-temporally heterogeneous mortality-temperature response functions to build a high-resolution model of adaptation in which incomes and average climate determine the sensitivity of mortality rates to changes in the climate. This model allows us to extrapolate response functions across the entire globe, as well as across time, using a range of economic, population, and climate change scenarios. Importantly, we develop and apply a revealed preference methodology to capture not only the benefits of adaptation, but also its costs. We combine these innovations to produce the first causal, micro-founded, global, empirically-derived climate damage function for human health. We project that by 2100, business-as-usual climate change is likely to incur mortality-only costs that amount to approximately 3-14% of global GDP.
10 May 2017
Presenters: Susanna Berkouwer (joint with Joshua Dean, MIT)
Title: Behavioral biases in household energy spending: Experimental evidence from charcoal and firewood cookstoves
Abstract: We seek to understand how behavioral biases affect poor households’ decision making regarding the consumption and usage of a durable good with a high-cost energy input. While there is a substantial literature about how behavioral anomalies and failures of rationality—including self-control problems, incorrect beliefs, limited attention and flawed decision heuristics—contribute to the energy efficiency gap in the US (see for example Gillingham and Palmer (2014) for a review), very few of these behavioral theories relating to durables purchasing and energy efficiency have been tested in a development setting. One might expect that since poorer consumers have more to lose from mistakes, they might be less susceptible to these biases. However, a large literature has looked at the psychology of decision-making among the poor, and finds that behavioral biases can be exacerbated by conditions associated with poverty such as increased stress, intra-househould bargaining, or cognitive load (see Haushofer and Fehr (2014) for a review of the leading theories). This project will attempt to bridge these two literatures by examining how behavioral biases affecting durable purchase and energy savings might be exacerbated or attenuated in a developing setting.
26 April 2017
Presenter: Tamma Carleton
Title: Free water, free trade? Agricultural policy and the implicit global water market
Abstract: In the presence of production externalities, trade liberalization has an ambiguous effect on aggregate welfare, as gains from trade must be weighed against changes in the level of externalities. In this project, I identify the effect of barriers to trade on the use of an understudied and notoriously underpriced factor of production: freshwater. Using a globally-comprehensive, satellite-based measure of total water availability, I ask how policies shaping agricultural markets alter where and how much water is used in the production of staple crops. I find that policies insulating domestic markets from global prices have substantial influence over local water availability, particularly when policies involve water-intensive crops and particularly in the locations most suitable for those crops. I show that the effects of these political levers are comparable in magnitude to other hypothesized drivers of water loss, such as changes in the climate. I discuss plans for expanding these results to support estimates of the welfare effects of agricultural trade liberalization in the context of underpriced water use.
12 April 2017
Presenter: Deirdre Sutula (joint with Rachel Baker, Princeton)
Title: Estimating the cost of flooding: Evidence from a UK policy change
Abstract: Over the past decade, more than 900 people were killed and 3.8 million were affected by flooding in Europe. This number is expected to rise dramatically in the future as climate change increases the frequency and intensity of flooding in the region. The United Kingdom in particular faces damages from flooding and climate change, with the number of homes at high risk rising by an estimated 120-150% by 2050. Using a dataset of almost 20 million housing sales in the UK, combined with high resolution maps of flood risk and flood extent, we exploit policy variation in flood insurance provision to estimate the cost of living in flood-prone areas via hedonic regression. We find that a sudden change in access to flood-insurance increases housing prices by 13% in high flood-risk areas. Our results have implications for optimal design and implementation of national schemes for flood insurance.
22 February 2017
Presenter: Danamona Andrianarimanana
Title: Health and wealth effects of agricultural fires in Madagascar
Abstract: Fire is regularly used in agriculture globally and especially in developing countries. Due to the traditional lack of fire data and because agricultural fires (fires used for agricultural practices such as clearing of grasslands and slash-and-burn practice) are motivated by expected gains in income and agricultural output, which are important predictors of health, there is a paucity of evidence regarding the net impact of fires on health. Using high-frequency and high-resolution fire and weather data from satellites, combined with monthly hospitalization data, I use wind variation on the day of fire to identify the pollution impacts of fires in Madagascar, where fire is extensively used to clear forests and pastures annually. Focusing my analysis on the impact of fires on birth outcomes and respiratory diseases, I find that increases in upwind fires lead to decreased birthweight and smaller birth cohort size as well as higher number of hospitalizations related to respiratory and eye infections. I find that these negative health effects persist over time and that effects are heterogeneous based on different levels of pollution exposure. On the other hand, consistent with the existence of a nutrition effect, I find that non-upwind fires predict better health.
01 February 2017
Presenter: Dave McLaughlin
Title: The Impact of Water Rights Curtailments on Junior Rights Holders in California’s Central Valley
Abstract: This paper constructs and analyzes a novel high-resolution dataset of cropping decisions near water rights diversion points in California from 2007-2015, and estimates the average treatment effect of a recent drought policy which sharply curtailed the water allocated to junior water rights holders in 2014 and 2015 on crop acreage for 20 different crops. The effect of supply curtailments on rights holders’ crop acreages is obtained using a differences-in-differences identification strategy. This paper finds that junior rights holders reduced water-intensive crop acreage such as rice and tomatoes by 5% and 3%, respectively. This paper also finds suggestive evidence of junior rights holders increasing less water-intensive acreages of corn and fallow acreage by 6.7% and 1.8%, respectively.
Presenter: Jon Proctor
Title: Estimating Global Agricultural Impacts of Geoengineering Using Volcanic Eruptions as Natural Experiments
Abstract: Solar radiation management (SRM) is increasingly considered a realistic, or even necessary, option for managing global temperatures, yet the economic impacts of ameliorating climatic changes by scattering sunlight back to space remain largely unknown. While SRM’s temperature- and precipitation-mediated impacts on global crop yields have been studied, the insolation impacts of stratospheric sulfate aerosols (SSA) on global yields have never been empirically estimated. Since photosynthesis tends to decrease with reductions in total insolation and increase with the diffuse fraction, the net impact of scattering incoming light on agricultural yield is ambiguous. Here we use the volcanic eruptions that inspired modern SRM proposals as natural experiments to provide the first empirical estimates of 1) how El Chichon and Pinatubo’s SSAs altered the quantity and quality of global insolation, 2) how those changes in insolation impacted global crop yields, and 3) the total effect that SSAs may have on yields in an SRM scenario when all climatic and insolation effects are jointly considered. We find that both the eruptions of El Chichon and Pinatubo altered the global radiation regime in ways unprecedented during our sample. Further, we find that the insolation-mediated impact of SSA on yields is negative for maize, soy, rice and wheat. This insolation effect is less negative for C3 crops than for C4 crops, as well as for aerosols that are more forward scattering. We find that in the G3 SRM scenario the total effect of SSA is essentially zero because its benefits from cooling are offset by similarly sized insolation-mediated damages. This suggests that SRM – if deployed in a way similar to the volcanic eruptions it seeks to mimic – would attenuate little the damages from climate change to global agriculture.
18 January 2017
Presenter: Dina Gorenshteyn
Title: How Important are Clear Notifications and Cost Salience in Capturing Attention? What is the Value of Attention? Evidence from the SFPUC Leak Detection Program
Presenter: Ellen Lin
Title: Environmental Regulations, Firm Performance, and Local Economies in China
Fall 2016 schedule
14 December 2016
Presenter: Matthew Zaragoza-Watkins
Title: Strategic Response to Environmental Regulation: Theory, and Evidence from the U.S. Freight Truck Industry
Abstract: Vintage-differentiated emission standards are widely used to regulate pollution from mobile and stationary sources. When a new standard is expected to increase the price of a new piece of equipment, forward-looking agents may choose to shift purchases ahead of policy implementation, which impacts the policy’s effectiveness and potentially biases analysts attempts to evaluate the impact of the program. To explore this, we develop a model of capital turnover, which predicts how forward-looking firms respond to costly regulation, and the impact of anticipation on the existing capital stock. We find the impact of anticipation depends primarily on the relative emissions rates of new, used and future pieces of capital, as well as the relationship between new-capital purchases and used-capital retirements. If sufficiently many pieces of higher-emitting, used capital are retired early, anticipation can provide net benefits. We test the predictions of our model empirically using a data set of monthly U.S. sales of new freight trucks around the time of EPA’s 2007 implementation of heavy-duty vehicle criteria pollution standards. Consistent with our predictions, we find evidence of a sales spike in the months before the policy took effect, and a sales slump after implementation. We show that prior estimates in the literature, which do not account for the effect of anticipation, significantly overstate the impact of the policy on sales. More broadly, our findings have important implications for regulatory impact analysis of markets in which agents can shift the timing of purchases in anticipation of new regulation.
30 November 2016
Presenter: Ed Rubin
Title: Natural gas elasticities, seasonal heterogeneity, and consumer behavior: Evidence from 300M+ bills
Abstract: In 2016 natural gas became the United States’ primary source of energy. This level of importance, coupled with the fact that natural gas’s prevailing pricing policies have been shown to be potentially inefficient and regressive, suggests understanding residential natural gas consumption behavior is a first-order problem. In this paper, I provide causally identified estimates of residential natural gas demand elasticities using a panel of more than 300 million bills in California. To overcome multiple sources of endogeneity, I utilize the border between two major natural-gas providers, in conjunction with an instrumental variables strategy. I estimate the “pooled” elasticity of demand for residential natural gas is between -0.30 and -0.25. I also provide evidence that the residential elasticity of demand for natural gas varies both with season and with income.
09 November 2016
Presenter: James Gillan
Title: More Power Plants or Smarter Homes? The Economics of Achieving More Flexible Electricity Demand
Abstract: Technological innovations over the past decade have allowed for resources with time-varying costs to be priced more efficiently. Electricity remains a canonical example where the need to balance supply and demand in real-time can lead to substantial short-term fluctuations in the marginal cost of generation. Historically, supply has been built to meet demand, but internet-connected smart home devices now allow consumers to easily respond to changes in the incentive to consume electricity. To estimate the effect of these new technologies on the responsiveness of short-term electricity demand, I perform a field experiment where households are randomly encouraged to adopt smart home devices. With little ahead notice, participants then face random variation in the incentive to consume electricity during specific periods. I explicitly test the hypothesis that automation technologies improve responsiveness, but that increasing financial incentives can achieve similar outcomes. This framework allows me to evaluate the economic benefit of deploying smart home devices that facilitate short-term elasticity in the demand for electricity.
26 October 2016
Presenter: Jon Kadish
Title: Transportation Costs and the Spatial Structure of Cities
Abstract: Over four billion people globally live in rapidly growing urban areas. There are a broad set of interacting factors that give rise to a particular spatial organization of households and firms, such as physical features and land use policy. Transportation costs and real estate prices drive individuals’ decisions about where to work and live. These choices have substantial welfare implications: in the US, we collectively spend over 18,000 person-years commuting everyday and vehicle transportation results in externalities including air pollution, congestion, accidents, and fatalities. Despite high social costs, there is little empirical evidence on the effect of changes in transportation costs on equilibrium city structure. Leveraging the repeal of the National Maximum Speed Law, this paper provides the first quasi-experimental estimates of how a shock to transportation costs impacts real estate prices, firm location and employment, and urban expansion.
12 October 2016
Presenter: Kenny Bell
Title: Empirical estimation of the impact of climate change on livestock industries: The case of dairy
Abstract: The vast majority of the land used in agriculture supports livestock systems, with most of this land in pasture. Due to concern about the environmental effects of changing land uses, and expected future demand increases for animal products, it is crucial to understand how these systems will react to future climate change. Using data on the quantity and quality of milk produced in New Zealand, this paper estimates the nonlinear relationship between weather and dairy production in a pasture-based system. I give suggestive evidence that accounting for heterogeneous response functions by season can have material impacts on climate impact projections.
28 September 2016
Presenter: Matt Woerman
Title: Strategic bidding and transmission congestion: Evidence from the Texas electricity market
Abstract: Competition in wholesale electricity markets depends importantly on the ability to transmit electricity throughout the power grid, which is sensitive to environmental factors. In particular, transmission capacity is reduced at extreme temperatures. I use this temperature-induced variation in the carrying capacity of transmission lines to estimate the effects of transmission congestion on firm behavior at natural gas combined-cycle power plants in the Texas electricity market. I find that offer prices to generate electricity more than double at the most extreme temperatures. I show this increase in the supply price is not driven by an increase in costs, but rather by firms exploiting the constraints of the transmission grid to increase markups. I estimate that during these hours of extreme heat, the price received by these plants increases twenty-fold. This evidence supports the conclusion that these plants are strategically increasing offer prices at times of constrained transmission to generate large economic rents.
14 September 2016
Presenter: Fiona Burlig (joint with Louis Preonas and Matt Woerman)
Title: Panel Data and Experimental Design
Abstract: How should researchers design experiments to detect treatment effects with panel data? In this paper, we derive analytical expressions for the variance of panel estimators under non-i.i.d. error structures, which inform power calculations in panel data settings. We use simulation to demonstrate that, with correlated errors, traditional methods for experimental design result in experiments that are underpowered with proper inference. Our theoretical results enable us to correct these problems in both simulated and real data. This paper provides researchers with the tools to design well-powered experiments in panel data settings.