Clare Balboni

Research Papers

"In Harm's Way: Infrastructure Investments and the Persistence of Coastial Cities"

Revise & Resubmit, American Economic Review

Abstract: Coasts contain a disproportionate share of the world's population, reflecting historical advantages, but environmental change threatens a reversal of coastal fortune in the coming decades as natural disasters intensify and sea levels rise. This paper considers whether large infrastructure investments should continue to favour coastal areas. I use a dynamic spatial equilibrium framework and detailed georeferenced data from Vietnam to examine this issue and find evidence that coastal favouritism has significant costs. Road investments concentrated in coastal regions between 2000 and 2010 had positive returns but would have been outperformed by allocations concentrated further inland even in the absence of sea level rise. Future inundation renders the status quo significantly less efficient. Under a central sea level rise scenario, welfare gains 72% higher could have been achieved by a foresighted allocation avoiding the most vulnerable regions. The results highlight the importance of accounting for the dynamic effects of environmental change in deciding where to allocate infrastructure today.

“Why do People Stay Poor?”, with Oriana Bandiera, Robin Burgess, Maitreesh Ghatak & Anton Heil

Abstract: There are two views as to why people stay poor. The equal opportunity view emphasizes that differences in individual traits like talent or motivation make the poor choose low productivity jobs. The poverty traps view emphasizes that access to opportunities depends on initial wealth and hence poor people have no choice but to work in low productivity jobs. We test the two views using the random allocation of an asset transfer program that gave some of the poorest women in Bangladesh access to the same job opportunities as their wealthier counterparts in the same villages. The data rejects the null of equal opportunities. Exploiting small variation in initial endowments, we estimate the transition equation and find that, if the program pushes individuals above a threshold level of initial assets, then they escape poverty, but, if it does not, they slide back into poverty. Structural estimation of an occupational choice model reveals that almost all beneficiaries are misallocated at baseline and that the gains arising from eliminating misallocation would far exceed the costs. Our findings imply that large one-off transfers that enable people to take on more productive occupations can help alleviate persistent poverty

Research in Progress

“Strategic Fire Setting: Evidence from 100,000 Forest Fires in Indonesia”, with Robin Burgess & Benjamin Olken

Abstract: Fire is often used for land clearing in the developing world, but once set fires may burn out of control. This creates a local environmental externality: if others own the area burned by a spreading fire, those who set the fires may not internalize the full damage risk. We explore how failing to internalize this risk drives the extensive forest fires in Indonesia, which burned over 2.5 million hectares in 2015 alone. We merge 15 years of daily satellite data over time and space to construct, for over 100,000 unique fires, the point of ignition and the extent to which each fire spread. We exploit the fact that fires are more likely to spread on windy days, combined with maps of property boundaries in the entire Indonesian forest system, to identify areas where fires are more likely to spread to others' property, to identify strategic fire setting behavior. We estimate that fires would be reduced by between 22 and 48 percent if the full local damage risk was internalized. Fire setters do distinguish among whose land they would burn: for example, fire setters seem to avoid the risk of burning national parks, which is most likely to lead to government sanctions. Voluntary certification systems, in particular the Roundtable on Sustainable Palm Oil (RSPO), reduce the overall use of fires but do not affect the degree to which owners internalize the costs of fires on neighbors. Similarly, we find much less use of fire in local election years, but this affects the level of fires, not the degree to which property owners internalize the fire externality. The results suggest penalizing owners for the damage spreading fires cause to others, for example through an effective tort system or enforcement regime, could considerably reduce forest fires.

“Transportation, Gentrification, and Urban Mobility: The Inequality Effects of Place-Based Policies”, with Gharad Bryan, Melanie Morten & Bilal Siddiqi

Roads, rail, and other public transport in a city are “place-based,” in that they are built in specific neighborhoods. Do such investments benefit the poor? If people are mobile within a city, then any such place-based investment can lead to neighborhood changes, such as rent increases, which change who can afford to live near these investments and hence who benefits from them. Using original panel data (tracked on two dimensions: (i) following households if they move, and (ii) surveying all new residents of buildings) we collected in Dar es Salaam, we study the distributional effects of Dar es Salaam’s nascent BRT system.