Job Market Paper
Pay a Man to Fish: Subsidies, Trade, and Cooperation in the Global Commons (draft coming soon)
Contemporary environmental issues are global in scope, but international cooperation to address them has often remained elusive: negotiations over the World Trade Organization's first agreement focused on environmental sustainability, which limits industrial fishing subsidies, remain deadlocked after more than two decades. In this paper, I develop a model of trade policy in which countries share a renewable resource stock and trade the output. Production subsidies impose externalities on trading partners through the world price, as in standard trade policy models, but also directly through the shared stock, which changes unilaterally optimal policy and the incentives to cooperate. To quantify the world price and resource stock channels, I assemble a new geospatial panel of the global tuna industry, linking GPS-derived vessel tracks with globally harmonized catch and effort records from regional fisheries management organizations. I present reduced-form evidence that local fishing effort imposes productivity spillovers onto other vessels, and that these spillovers are more pronounced in areas outside of national waters. I then estimate supply using a vessel-level location choice model and demand using ocean-climate shocks as instruments, and incorporate an industry-standard biological model to capture ocean-level stock regrowth. I embed them in a dynamic game in which governments set trade and fisheries policy over shared tuna stocks. As fleets adjust, governments shift terms-of-trade manipulation from tariffs onto production policy, so that binding tariffs alone recovers at most about a third of the gains from full cooperation. These gains accrue to resource-exporting countries at the expense of large importers.
Publications
The Economics of Tropical Deforestation
with Clare Balboni, Robin Burgess, and Benjamin A. Olken.
Annual Review of Economics 15, pp. 723-754. September 2023.
[Publisher's version] [Online appendix]
Working Papers
Clearing the Air on the Benefits and Costs of Road Infrastructure
with Clare Balboni, Johannes Boehm, Lorenzo Marzano, and Mazhar Waseem.
Investments in transportation infrastructure can yield sizable trade and commuting cost gains, but may also contribute to damaging local air pollution from increased vehicle traffic. Accounting for such costs is especially important in developing country cities, which are making significant investments in expanding road networks but where high ambient pollution concentrations contribute to severe health impacts. We develop a quantitative urban equilibrium model, integrating a novel granular atmospheric model of pollution dispersion, in order to estimate the impacts of investing in urban roads accounting for both gains from economic integration and costs from local pollution exposure. We estimate the model using high-resolution data on emissions, pollution transport, commuting and goods trade in Lahore, Pakistan, one of the world’s most polluted cities. Counterfactual simulations consider the aggregate and distributional implications of major road infrastructure projects in the city.
Environmental Regulation with Irreversible Investments: Evidence from High Plains Aquifer Depletion
with Nathaniel Hickok
Many of the world’s major aquifers are rapidly depleting from agricultural irrigation, generating dynamic common-pool externalities by raising future extraction costs. While Pigouvian taxation can restore the first-best outcome, such policies are often infeasible due to political and technological constraints. By contrast, extensive-margin policies that regulate well entry are second-best but administratively simple. We study this tradeoff by developing and estimating a dynamic model of farmers’ joint well-drilling and water-use decisions using a novel dataset of aquifer levels, agricultural water use, and crop production in the Kansas High Plains Aquifer from 1959–2022. We find that entry fees can create substantial welfare gains but that their effectiveness erode rapidly over time. In 1960, entry fees would have captured three-quarters of the gains of Pigouvian taxation, by 1980 only one-quarter, and today virtually none. This rapid decline reflects negligible marginal extraction costs relative to fixed well drilling costs, ensuring depletion becomes largely locked in once wells are sunk. Together, these findings highlight the importance of irreversible investments in constraining second-best environmental regulations.
Out with the Old, In with the New: Equity and Efficiency of Secondary Market Subsidies for Electric Vehicles
with Nathaniel Hickok and Dam Linh Nguyen
We evaluate the relative cost effectiveness and distributional impacts of primary- and secondary-market subsidies for electric vehicle adoption. We develop a simple theoretical framework that highlights the ambiguous cost-effectiveness of the two subsidy designs. Relative to subsidies for purchases of used electric vehicles, subsidies for new purchases always induce greater adoption. However, they also lead to more inframarginal government spending due to consumer selection into resale. We study this trade-off empirically by proposing a dynamic model of the vehicle market, which captures sorting of consumers into resale through endogenous vehicle replacement decisions. To analyze the equilibrium consequences of the two subsidy designs, we calibrate the model using granular data on car registrations and transactions in Texas from 2015 to 2022. Counterfactual results indicate that, in our setting, secondary-market subsidies: (1) are more cost-effective than primary-market subsidies due to large decreases in inframarginal spending; and (2) achieve more progressive distributional impacts.
Global Public Goods and Local Public Services: Evidence from Polio Eradication in Pakistan
What are the consequences of limited state capacity in developing countries for the pursuit of global public goods provision? I study this question in the context of polio eradication in Pakistan, where the disease remains endemic and where policy commitment to eradication has escalated over the past decade. Exploiting the incidence of genetic mutations in the oral polio vaccine virus that cause localized outbreaks, I test whether a short-term increase in the intensity of polio eradication activity crowds out the receipt of routine childhood immunizations delivered primarily in local health clinics. I find empirical support for a crowd-out effect: children born in a quarter-year of intensified polio immunization activity are 8.9% less likely to have received the BCG (tuberculosis) vaccine and 19.5% less likely to have received the first dose of the diphtheria, pertussis, and tetanus (DPT) vaccine. I find evidence that these effects are driven mainly by the supply of, rather than demand for, vaccines and health services. My results have implications for the design of health and vaccination campaigns and for assessment of the local costs of public goods provision in developing countries.
Work in Progress
Firm-Level Adaptation to Carbon Border Taxes: Evidence from a Randomized Evaluation
with David Atkin and Banu Demir
Coverage: MIT Spectrum
Reducing firm-level emissions while minimizing impacts on economic growth has become a central dilemma facing policymakers in low- and middle-income countries, especially as countries around the world have begun using trade policy to tax the carbon content of imports. In this project, we experimentally evaluate three interventions—consisting of technical training and subsidized loans for investments—aimed at mitigating the economic costs of the European Union's Carbon Border Adjustment Mechanism (CBAM) on small and medium enterprises in Türkiye. The first intervention focuses on direct carbon mitigation measures; the second focuses on product innovation to move firms toward greener product mixes; and the third focuses on improving firm-level productive efficiency. In the first wave of the experiment, we have randomized over 500 Turkish manufacturing firms using a clustering algorithm to maximize power to detect domestic spillovers (i.e., leakage) of the intervention to untreated firms. Combining newly collected survey data on firm-level investments, production practices, and carbon emissions with administrative data on the universe of Turkish firm-to-firm linkages and sales, we will assess the tradeoffs between environmental and firm growth outcomes and explore whether policies can simultaneously achieve both goals.
Environmental Spillovers of Trade Policy
with David Atkin and Banu Demir
A large share of trade tariffs in recent years have targeted heavily polluting industries such as iron and steel production, raising the possibility that trade policy focused on these industries may have unintended environmental consequences. We leverage firm-level administrative data from Türkiye to estimate the effects of the 2018 tariff increases implemented by the United States and subsequent retaliatory tariffs implemented by China, the European Union, and other trading partners. First, we document that Turkish iron and steel firms with higher pre-2018 export shares to the US differentially reallocated exports to the EU after tariffs on Türkiye were introduced. Second, we provide evidence that these Turkish firms concurrently increased their investments in less carbon-intensive production through purchases of specific “green” production technologies prioritized by EU importers. We plan to conduct a full accounting of the carbon emissions consequences of this tariff-driven trade reallocation, decomposing technique, scale, and composition effects.
Spatially Governing the Commons
with Karl Aspelund
Environmental regulators seek to achieve resource sustainability targets in the face of ecological and economic shocks that affect different areas, producers, and time periods unevenly. While alternative instruments such as taxes, quotas, closures, or input restrictions can deliver the same stock targets in expectation, they differ in how they expose participants in the commons to volatility in harvests and profits. Inequality aversion, diminishing returns to contemporaneous harvests, and the shadow value of future resource stocks make differences in volatility welfare-relevant from a social planner’s perspective. We develop a framework, nesting canonical results from the prices versus quantities literature, to evaluate when and how instrument design matters under uncertainty. We use the framework to illustrate how instrument choices in different areas can be cast as a portfolio-choice problem in which regulators can choose levels of risk over aggregate harvests or certain distributional outcomes. The framework explains why policies that appear second-best in a deterministic setting, such as input restrictions or long seasonal closures, can be preferred once their risk-stabilizing properties are recognized. To apply our framework, we collect detailed harvest, price, and ecological data from the U.S. Atlantic scallop fishery, one of the nation’s highest-value fisheries, and illustrate how alternative policy mixes can meaningfully impact welfare outcomes under different degrees of inequality aversion.
Internalizing Environmental Externalities: A Coasean Approach to Urban Solid Waste Management in Kampala, Uganda
with Mychaela Paetow
Funding: IGC SPF Grant
Cities in developing countries are generating increasing volumes of solid waste, straining existing waste management systems. Open dumping and burning are common means of disposal, generating meaningful environmental and health externalities, especially in low-income communities and informal settlements. We partner with the Kampala Capital City Authority to test a new intervention designed to deter dumping: installing nets to catch household solid waste that would otherwise flow through rainwater drainage channels, causing flooding downstream. We are piloting a mechanism to elicit downhill households’ willingness-to-pay, and uphill households’ willingness-to-accept, to install nets along shared drainage channels, facilitating Coasean bargaining to realign private and social costs from improper waste management practices.
The Economics of Informal Recycling Markets: Evidence from Indonesia’s Waste Banks
with Mychaela Paetow
Funding: J-PAL K-CAI
China’s Fishing Subsidies in the 21st Century
with Andrés de Loera