UC San Diego

This dissertation consists of three chapters. Each chapter studies the role of policy design in minimizing environmental damages within markets for living natural resources.

Chapter one provides a theoretical framework for the design of incentives to internalize externalities produced from stocks of renewable natural resources, i.e. "stock-generated externalities." I show that, unlike typical environmental externality settings, when the stock of renewable natural capital held by a firm produces an externality, incentives that target outputs to production lead to levels of environmental quality that are no better than no policy in the long run. By contrast, incentives that target the stock more directly can lead to a level the socially optimal level of environmental quality. I calibrate the model using scientific and industry parameters of Eastern oyster (C. virginica) cultivation in the Chesapeake Bay, which provides ecosystem services in the form of water filtration.

Chapter two studies conservation leakages associated with the unilateral regulation of transboundary resources. We focus on a series of closures between 2001-2004 in the West Coast swordfish (X. gladius) fishery enacted to protect vulnerable and endangered sea turtles, in accordance with the Endangered Species Act. We find evidence of substitution by consumers between domestic swordfish and less regulated swordfish imports, suggesting a potential transfer effect. We predict the total quantity of imports attributable to a shock in domestic shallow-set longline landings, then provide back-of-the-envelope sea turtle bycatch calculations globally and for a domestic counterfactual. We predict that an additional 23.620 incidental turtle takes occurred globally as a result of the closure, which is within the predicted range had the closure not occurred (17.930-35.639 turtles domestically). The results suggest that the closure, which was intended to conserve global sea turtle populations, did not meet its regulatory objective.

Chapter three evaluates the direction of green innovation and adoption in the absence of directed incentives. We utilize an exogenous shock to U.S. organic food demand in 2006 to study the change in composition of toxic versus non-toxic pesticide products, otherwise known as biopesticides, and subsequent adoption behavior by CA farmers. While biopesticides increased as a proportion of all pesticides post-shock, the majority of the increase was comprised of generics. This suggests a stagnation in pest-protective efficacy of the product pool, and may have been driven by the structure of the EPA pesticide approval process. While the product pool stagnated in efficacy, we find evidence of increased biopesticide adoption and lower toxicity of pesticides used by CA farmers. The increase in green technology adoption was likely due to higher returns to cleaner farming practices rather than the productivity of the input pool.