Working Papers
Does Market Power in Local Agricultural Markets Hinder Farmer Climate Change Adaptation?
(with Ruozi Song)
Abstract | Draft | Mercatus Podcast
What role do government policies which distort market competition play in impeding farmers’ climate change adaptation? We study this question in the context of India, where longer-run adaptation to climate change has been inadequate — posing a considerable risk to its ∼250 million agricultural workers. We exploit spatial discontinuities in intermediary market power, created by state-level laws that restrict farmer-intermediary transactions to the same state, to determine how spatial competition affects farmers’ adaptation. We find that a farmer selling in the 75th percentile of the competition index compared to one that faces the 25th percentile of the competition index achieves a 4.9 percent higher output for each additional day of extreme heat. This effect is driven by increased input usage by farmers in anticipation of higher prices after climate shocks, an effect limited only to to high competition areas. We then propose and estimate a quantitative spatial trade model with intermediary market power to examine the welfare implications of higher competition for adaptation. Our structural estimates suggest that the farmer’s economic loss (i.e. their climate damage function) due to extreme weather could be mitigated by 13.8 percent if government regulation distorting market competition are dismantled. These results highlight the importance of understanding the political economy of reforming these competition-distorting laws to accelerate climate change adaptation.
Presentations: USC Applied Microeconomics Seminar (2022), Tufts University (2023), Georgia Institute of Technology (2023), University of Warwick (2023; Virtual), AERE@OSWEET (2023), LSE Environment Day (2023), Harvard Climate Economics Pipeline Workshop (2023), Camp Resources XXIX - NC State University (2023), NBER Conference on Distributional Impacts of Climate Change in the Agricultural Sector (2023)
Adapting to Flood Risk: Evidence from a Panel of Global Cities
(NBER Working Paper 30137)
(with Sahil Gandhi, Matthew Kahn, Somik Lall and Vaidehi Tandel)
Abstract | NBER Draft | VoxEU | WEF
Urban flooding poses danger to people and places. People can adapt to this risk by moving to safer areas or by investing in private self-protection. Places can offset some of the risk through urban planning and infrastructure investment. By constructing a global city data set that covers the years 2012 to 2018, we test several flood risk adaptation hypotheses. Population growth is lower in cities that suffer from more floods. Richer cities suffer fewer deaths from flood events. Over time, the death toll from floods is declining. Cities protected by dams experience faster population growth. Using lights at night to measure short run urban economic dynamics, we document that floods cause less damage to richer cities and cities with protective dams. Cities with more past experience with floods suffer less from flooding.
Do Water Audits Work?
(NBER Working Paper 31831)
(with Jesper Akesson, Robert Hahn and Robert Metcalfe)
Abstract | NBER Draft | The National News
Water suppliers are showing greater interest in using different mechanisms to promote conservation. One such mechanism is conducting home water audits, which involves assessing water use and providing tailored suggestions for conserving water for residential customers. Yet, very little is known about the economic impacts of these water audits. This paper helps fill this gap by implementing a natural field experiment in the United Kingdom. The experiment involves randomly allocating 45,000 water customers to a control group or to treatment groups that receive different behavioral encouragements to take-up an online water audit. Our analysis yields three main findings. First, encouraging subjects to participate in an audit with financial incentives reduces household consumption by about 17 percent over two months. Furthermore, we find that the size of the financial incentive used to encourage conservation matters for take-up, but not conservation. Second, notwithstanding these improvements in water conservation, the per capita net benefits of the intervention are close to zero under a wide range of assumptions. We also implement a marginal value of public funds approach that considers benefits and costs and we reach a similar conclusion. Third, we find that targeting of high users could double the effectiveness of the financial incentive interventions.
Presentations: UChicago Experimental Economics Brown Bag (2023), 79th Annual Congress of the International Institute of Public Finance - Utah State University (2023)
Local Pollution Externalities from Driving: Evidence from Roadway Vehicle Sensors
(with Antonio M. Bento, Ruozi Song and Andrew R. Waxman)
Abstract | Slides
This paper seeks to understand the localized effect of automobile congestion on air pollution. We leverage air pollution sensors on Google Street View cars combined with fine grain speed and vehicle density observations on Los Angeles Highways, to understand this effect at a level of granularity never previously considered using causally identified methods. We show that higher pollution occurs at very low and very high speeds due to lowered engine efficiency. Given the success to date of reducing pollution via tailpipe emission standards, we show that the magnitude of our effects points to the need to focus more attention by policymakers on vehicle speeds for further mitigation of health impacts from vehicle emissions. Our results have important implications for understanding human health effects of anti-congestion policies, speed limits and point to a need to better regulate sources of fine particulate matter pollution from tires and brakes.
Presentations: International Transport Economics Association Annual Conference (2021), UEA Conference (2021)
Work in Progress
Do Nudges Backfire? It Depends on the Experimental Design
(with Robert Hahn and Robert Metcalfe)
Abstract
Water suppliers are showing greater interest in using non-price mechanisms that can help encourage conservation. One such mechanism is information campaigns, which provide households with actionable insights into ways to reduce water usage. Most of these campaigns are targeted towards the general population and aimed at reducing wastage during essential water usage. Little is known about the efficacy and efficiency of campaigns that target recreational water usage in high income households. This paper helps fill this research gap by implementing two natural field experiments in Texas, United States. We first implement a pilot, inviting 5,705 customers with swimming pools to participate in a draw that awarded a free pool checkup. Households which expressed interest are randomly allocated to three groups—a Checkup group which received a free pool checkup, a Mailer group which received an informational sheet on pool care, and a control group. Subsequently, we implement a second experiment, wherein the Mailer treatment is randomized to the entire population of pool owners under the purview of the utility. Our analysis yields three main findings. First, the information campaign backfires, with households in the treatment group consuming 270 liters per day (22 percent increase) more relative to the control group six months after treatment. Heterogeneity analysis based on observables shows that even the Checkup treatment backfires, with relatively richer households increasing their consumption by 430 liters per day (36 percent increase) half a year after treatment. Second, the scale up of the pilot did not yield, on average, a significant increase in consumption. However, even in this case, richer households in the treatment group have a significantly higher consumption of 128 liters per day (10 percent increase) six months after treatment. Third, reweighting our estimates from the pilot does not accurately predict the results from the scale up, which underscores the role of unobservable household characteristics in determining self-selection into the pilot. Our results have important implications for targeting of behavioral interventions for water conservation, and scale up of field experiments.