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Essays in Environmental Economics

  • Author(s): Lin, Lan
  • Advisor(s): Anderson, Michael L
  • et al.
Abstract

This dissertation features three empirical studies on the interaction of economic activities and the environment. Chapter 1 estimates the costs of environment regulations by analyzing administrative records of industrial firms in China. Chapter 2 investigates the relationship between environmental conditions and birth decisions and uses online purchases to infer fertility trends. The last chapter examines household panel scanner data to evaluate the impact of changing fuel prices on consumers' shopping patterns. These three papers take advantage of different data sources to answer important questions in environmental economics, on both the producer and the consumer side.

The first chapter measures the impacts of ad hoc environmental regulations in China on firm performance. Under global attention and pressure, the Chinese government adopted a number of radical emergency pollution control measures to ensure good air quality during the 2008 Beijing Olympic Games. Polluting plants in and near the city were required to reduce or suspend production, and plants in the more polluting industries and in areas closer to Beijing were subject to stricter regulation. Exploiting this variation in regulatory stringency by time, industry, and distance, I use a triple differences-in-differences design to study the costs of environmental regulations on producers in China. I find that firms in heavily-polluting industries within Beijing experienced large negative shocks during the event year, with significant reductions in revenue, output, employment, and profits. Nonetheless, the estimated costs of the ad hoc regulations are less than 30% of the previously estimated health benefits from improved air quality.

The second chapter explores reasons behind China's declining fertility and examines the role of deteriorating environmental quality. China has one of the world's lowest birth rates, even following the lifting of the one-child policy. Survey results show that concerns over environmental conditions are an important factor affecting child-bearing decisions. In this paper, I use online purchases of products related to child birth to study whether and how pollution level affects fertility intentions. Using a distributed-lag model and exploiting random variation in air pollution stemming from thermal inversions, I find that people have less desire to have more children when air pollution worsens. Long-term changes in air quality have stronger impacts than contemporaneous fluctuations. I also find limited effect heterogeneity between high and low-income cities, suggesting that the negative relationship between fertility intentions and pollution is unlikely due to financial worries such as higher health care expenditures.

The third chapter empirically studies the effects of gasoline prices on retail channel choices, especially online channels, using the Nielsen HomeScan Panel Data for more than 12,000 Californian households from 2004 to 2013. I find some evidence that gasoline prices do affect store format choices, and that consumers visit closer stores, reduce shopping trips, and switch away from grocery and discount stores toward warehouse clubs and drug stores when gasoline prices are high. However, there is little support to the claim that online sales benefit from rising fuel prices as consumers try to avoid driving to save on gas. The estimated effects of gasoline prices on online purchases are both small and insignificant.

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