UC Santa Barbara

China has experienced drastic climate change and severe environmental pollution since the 1980s. This dissertation provides economic analyses of these two types of environmental changes in China by focusing on the temporal evolution of agricultural sensitivity to extreme heat and the political economy explanations for severe air pollution in China. Chapter 1 examines the time-varying impacts of extreme temperatures on Chinese agriculture over 1981 to 2010. By estimating a period-specific panel regression model using nationwide county-level agriculture production data combined with fine-scale meteorological data, I primarily find the impact of a daily exposure to extreme temperatures on corn and soybean yields in the post-1996 period is 40% to 50% less than that in the pre-1996 period and the decline in the extreme temperature impacts on crop yields mainly occurs in counties with expanding irrigation coverage. Chapter 2 explores reasons for severe air pollution from the perspective of political economy by examining the environmental consequences of the county-to-city upgrading policy which delegates the autonomy of building cities to upgraded counties. In a centralized system like China, economic decentralization without changing the promotion metrics centered around economic performance for local government officials would likely lead to worse environmental quality because local officials compete for promotion on economic performance. Using a comprehensive county-level dataset on economic performance indicators and air pollutant concentrations, I primarily find significantly positive policy effects on economic growth and air pollutant concentrations, suggesting that the upgraded counties promoted economic performance at the cost of local air quality. I also calculate the total loss due to the increasing air pollution as valued in terms of statistical life to indicate the magnitude of the social cost of the upgrading policy.

Following the finding of decline in agricultural sensitivity to extreme heat in Chapter 1, Chapter 3 quantifies the contribution of the temporal evolution of extreme temperature impacts to the growth of agricultural revenue during 1981-2010 using an Oaxaca-Blinder decomposition which attributes the growth of agricultural revenue to the change in the levels of predictors and to the change in the coefficients for the predictors. I find extreme temperature impacts on agricultural revenues per hectare in the post-1996 period is more than 60% lower than that in the pre-1996 period, contributing 6.1 percentage points of revenue growth over the two periods, which is 5.4% of the overall growth of agricultural revenue. The significant increase in marginal benefit of irrigation in terms of moderating extreme temperature impacts may have contributed about 40% of the decline in the extreme temperature impacts on agricultural revenue per hectare.