This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

  1. Home
  2. ASSA Annual Meeting
  3. 2023
  4. Program
  5. Trade, Investments, and the Environment in Developing Countries
« Back to Results

Trade, Investments, and the Environment in Developing Countries

Paper Session

Sunday, Jan. 8, 2023 1:00 PM - 3:00 PM (CST)

New Orleans Marriott, Galerie 1
Hosted By: Association of Environmental and Resource Economists
  • Chair: Jinhua Zhao, Cornell University

Multinational Corporations and the Environment

Frederik Noack
,
University of British Columbia
Dominic Rohner
,
University of Lausanne
Tommaso Sonno
,
University of Bologna

Abstract

Improved environmental regulations in developed countries have raised concerns
that polluting industries merely reallocate their production to developing countries with less
stringent environmental regulations. Although increased production in developing countries
may generally contribute to economic development, excessive environmental degradation may
partly offset those benefits. In this project, we use a spatial panel of multinationals’ activity in
Africa to quantify their impact on the environment. This is to the best of our knowledge the first
paper that studies the causal impact of multinationals’ on a range of environmental outcomes
across a large geographic region.

The Recovery of Forest and Its Impacts on Left-behind Children in Western China

Wen Wang
,
Hong Kong University of Science and Technology

Abstract

Conserving and restoring forests are critical and pervasive strategies to improve environment. While
numerous studies work on the effectiveness of greenness improvements on children's academic
performance and health, there is limited research investigating greenness improvements' effects on
children's education considering its enduring psychological and economic impacts (i.e., land
transition and labor migration). This paper attempts to explain how the socioeconomic changes from
reforestation programs, including income and migration, impact children's long-term educational
attainment and financial outcome. The findings from these analyses have important policy
implications to investigate reforestation policies' distributional impacts.

China implemented one of the most extensive forest conservation and restoration programs --- the
Natural Forest Conservation Program (NFCP) since 2000. The program ban logging in natural forests
and transform rural farmland to forestland by compensating households for the conversion. Forest
transition follows with socio-demographic changes resulting from changes in land use and labor
allocation. Off-farm labor migrate to urban areas searching for non-agricultural jobs. Parental
migration causes parental absences for children due to China's restrictive household registration
system and high education costs. Coinciding with such changes, investigating the programs'
distributional effects is necessary, especially for impoverished people and voluntary groups such as
Left Behind Children.

To study these issues, we assess the reforestation in north-western China between 2000 and 2015
using MODIS Normalized Difference Vegetation Index (NDVI) data. Census data and a longitudinal
multi-level survey data. Applying the triple difference approach and the instrumental variable
approach, we estimate parental migration's impacts on Left-Behind Children's education outcome
and evaluate reforestation policies' distributional impacts on residential welfare. The project extends
reforestation studies in three dimensions: characterizing its effects on income and off-farm
migration, estimating its spillover effects on Left Behind Children, and evaluating its distributional
welfare effects.

Institutions, Comparative Advantage, and the Environment

Joseph Shapiro
,
University of California-Berkeley

Abstract

I propose a new explanation for why developing countries have high levels of air and water pollution: financial, judicial, and labor market institutions provide comparative advantage in clean industries. Thus, weak institutions make countries poor and polluted, while strong institutions make countries rich and clean. Countries with stronger institutions concentrate production in clean industries, even conditional on environmental regulation and endowments of water, energy, and other sources of comparative advantage. I find large environmental benefits of institutions across countries, within countries over time, instrumenting institutions with legal origins, and comparing across states within a country. Institutions have similar importance as environmental regulation or factor endowments in explaining global patterns of industrial pollution. I conclude that strong institutions decrease pollution through comparative advantage.

Defending Against Air Pollution: The Role of Active Information Nudge and Inattention

Jinhua Zhao
,
Cornell University
Yazhen Gong
,
Renmin University of China

Abstract

Information nudges have been widely used to influence behavior but there is a lack of understanding of the associated mechanisms and the optimal design. We distinguish active and passive information nudges and show that the former is more effective in promoting defensive behaviors such as outdoor time and mask-wearing against air pollution, and does so through reducing inattention. We conduct a large-scale field experiment through randomized control trials in Northern China with treatments of free masks and information nudges throughout a winter heating season when pollution was the heaviest. Unlike passive information nudges where participants were simply provided information about pollution and the associated health damages and required defensive measures, active nudges require participants to perform an easy task such as matching pollution levels with the corresponding health damages as well as the necessity to wear facemasks.
We find strong evidence that active information nudges improve outdoor and mask-wearing behaviors and reduce respiratory and cardiovascular-related hospital visits, whereas passive nudges do not have significant effects. We develop parametric and nonparametric measures of (daily) inattention to air pollution and inattention to the associated health damages and find that both types of inattention lead to suboptimal defensive behaviors. Active information nudges reduce inattention levels, especially on high pollution days, and a sizable proportion of the active nudges’ positive effects is achieved through reduced inattention. In contrast, while providing free masks leads to more mask-wearing on smog days, it does not improve outdoor behavior or reduce inattention.
Our findings have important implications for promoting defensive behavior against pollution, and for the design of nudge intervention in general. Our study also highlights an important aspect of defensive behavior that is often ignored in the literature, namely the need to avoid adopting costly defensive behaviors in face of low or no pollution.

Key words: defensive behaviors; information nudges; inattention
JEL: Q53, C93
 

Discussant(s)
Arik Levinson
,
Georgetown University
Maggie Liu
,
U.S. Department of the Treasury
Jevan Cherniwchan
,
Carleton University
Anant Sudarshan
,
University of Chicago
JEL Classifications
  • Q5 - Environmental Economics
  • Q2 - Renewable Resources and Conservation