Empirical Environmental Economics

Objective

This course will examine current issues in environmental economics, with a focus on how micro-econometric methods can be used to answer research questions in that field. It will provide students with an overview of the recent literature, the challenges of using applied microeconomics and policy evaluation methods in environmental economics, and some practical tools to overcome these challenges.

We will draw on the recent empirical literature in environmental economics to better understand:
i) what are the key challenges in tackling environmental issues, in particular climate change, from the perspective of both developed and developing countries
ii) what answers the recent environmental economics literature has provided on these issues
iii) how to conduct empirical research on these questions.

Students are expected to have read the compulsory academic papers before each lecture. We will start the lecture with an open discussion of the papers. Negative points will be given to students who evidently didn’t read the papers.
The examination will be based on a group assignment (groups of 2 or 3 students) in which the students will use statistical software to analyze data and answer a research question, based on a list of proposed topics and published papers. The assignment will take the form of a short research paper including a literature review and a data analysis, along with the code used to analyze the data.
The final grade will be made of the grade at the group assignment, plus any negative points from not reading the mandatory papers.
Pre-requisites
The course combines theory and empirics and has a strong applied focus. In particular, it is assumed that students will have followed a course in micro-econometrics and policy
evaluation methods such as the Microeconometric Evaluation of Public Policies course given by Bruno Crépon. Having followed the Introduction to Environmental Economics course given by François Bareille in 2A will help, but is not a pre-requisite.

Intended Learning Outcomes
Upon successful completion of the course, students will:
- have knowledge and understanding of the major debates of environmental economics (including those related to the design of environmental and climate regulation, the valuation of environmental externalities, the interplay between inequalities and the environment and the roles of social norms, behavioral failures and political economy factors in accelerating or slowing down the implementation of environmental policies)
- understand how to use key empirical tools from econometrics and data analytics to critically assess the effectiveness of environmental policies in different settings
- be able to think critically about the available evidence on different policy interventions and use it to formulate nuanced policy recommendations

Planning

Format and Structure
The course will consist of 6 three-hour lectures. The course reading list consists entirely of academic papers and is extensive. It includes two compulsory academic papers per lecture, as well as a list of other readings, which lectures may refer to but which won't go into in detail. Students are strongly encouraged to read at least the abstracts of all these other papers.

The course will cover five topics:
1) Climate change and climate policy (2 lectures): in the first lecture we will examine how micro econometrics tools can be used to estimate the causal impact of climate policies and the magnitude of climate damages, while accounting for adaptation. In the second lecture, we will discuss how to empirically examine different fairness issues related to climate change, and how to account for trade and leakage in the design of climate policies.
2) Local pollution (air, water, soil): while carbon emissions generate a global externality, other environmental pollutants generate local damages. We will examine the empirical challenges related to measuring local pollution and its impacts on individuals and firms, and discuss the empirical strategies commonly used in the literature to circumvent endogeneity issues.
3) Deforestation, ecosystem services and biodiversity: we will cover the recent literature on the causes and solutions to deforestation, with a special focus on the use of satellite data to monitor deforestation outcomes. Then we will discuss recent papers estimating the value of ecosystem services and of biodiversity.
4) Environment and development: we will examine the potential trade-offs and complementarities between environmental conservation and economic development. Then we will review the literature highlighting the challenges of environment regulation and clean technology adoption in developing countries, where enforcement can be low, corruption high, and credit constraints widespread.
5) Political Economy and determinants of Environmental Attitudes: a recent but growing empirical literature studies the political economy, institutional and behavioralfactors hindering the implementation of environmental and climate policies. We will review this literature, with a specific focus on the use innovative empirical methods such as text analysis and information treatments in surveys.
The syllabus will mainly be focused on applied microeconomic topics and leverage students' knowledge of empirical methods from previous training in econometrics.

References

Syllabus (papers for student debates indicated in bold, alloctade to students in first lecture)

Lecture 1: Mitigating climate change

Carbon pricing
Papers:
-    Colmer, J., Martin, R., Muûls, M., & Wagner, U. J. (2024). Does Pricing Carbon Mitigate Climate Change? Firm-Level Evidence from the European Union Emissions Trading System. Review of Economic Studies, rdae055. doi: 10.1093/restud/rdae055
-    Andersson, Julius J. "Carbon Taxes and CO2 Emissions: Sweden as a Case Study." American Economic Journal: Economic Policy, vol. 11, no. 4, Nov. 2019, pp. 1-30, doi:10.1257/pol.20170144

Subsidies
Papers:
-    Calel, R., Colmer, J., Dechezleprêtre, A., & Glachant, M. (2025). Do Carbon Offsets Offset Carbon? American Economic Journal: Applied Economics, 17(1), 1–40. doi: 10.1257/app.20230052

Behavioral interventions and nudges
Papers:

-    Allcott,H., & Rogers, T. (2014). The Short-Run and Long-Run Effects of Behavioral Interventions: Experimental Evidence from Energy Conservation. American Economic Review, 104(10), 3003–37. doi: 10.1257/aer.104.10.3003

Trade and leakage
-    Campolmini A, Fadinger, H., Forlati, C, Stillger, S, & Wagner, Ulrich J. (2024). Designing Effective Carbon Border Adjustment with Minimal Information Requirements. Theory and Empirics. Working Paper
-    Grubb, M., Jordan, N. D., Hertwich, E., Neuhoff, K., Das, K., Bandyopadhyay, K. R., ...Oh, H. (2022). Carbon Leakage, Consumption, and Trade. Annual Review of Environment and Resources, 47(1), 753–795. doi: 10.1146/annurev-environ-120820-053625
-    Shapiro, Joseph S. (2021). The Environmental Bias of Trade Policy. Quarterly Journal of Economics, vol. 136, no. 2, pp. 831-86, doi:10.1093/qje/qjaa042.

Lecture 2: Climate change impacts and adaptation

Climate impacts

Papers:
-    Carleton, T., Jina, A., Delgado, M., Greenstone, M., Houser, T., Hsiang, S., ...Zhang, A. T. (2022). Valuing the Global Mortality Consequences of Climate Change Accounting for Adaptation Costs and Benefits. Quarterly Journal of Economics, 137(4), 2037–2105. doi: 10.1093/qje/qjac020
-    Somanathan, E., Somanathan, R., Sudarshan, A., & Tewari, M. (2021). The Impact of Temperature on Productivity and Labor Supply: Evidence from Indian Manufacturing. Journal of Political Economy. doi: 10.1086/713733
-    Garg, T., Jagnani, M., & Taraz, V. (2020). Temperature and Human Capital in India. Journal of the Association of Environmental and Resource Economists. doi: 10.1086/710066

Adaptation

-    Aragón, F. M., Oteiza, F., & Rud, J. P. (2021). Climate Change and Agriculture: Subsistence Farmers' Response to Extreme Heat. American Economic Journal: Economic Policy, 13(1), 1–35. doi: 10.1257/pol.20190316
-    Burke, M., & Emerick, K. (2016). Adaptation to Climate Change: Evidence from US Agriculture. American Economic Journal: Economic Policy, 8(3), 106–40. doi: 10.1257/pol.20130025
-    Moscona, J., & Sastry, K. A. (2023). Does Directed Innovation Mitigate Climate Damage? Evidence from U.S. Agriculture. Quarterly Journal of Economics, 138(2), 637–701. doi: 10.1093/qje/qjac039
-    Costinot, A., Donaldson, D., & Smith, C. (2016). Evolving Comparative Advantage and the Impact of Climate Change in Agricultural Markets: Evidence from 1.7 Million Fields around the World. Journal of Political Economy.
-    Allan Hsiao, Jacob Moscona, Karthik A. Sastry (2024). Food policy in a warming world. Working Paper

Lecture 3: Climate change and inequality

Inequality in contribution to emissions

Papers:
-    Chancel, L. (2022). Global carbon inequality over 1990–2019. Nature Sustainability, 5(11), 931–938. doi: 10.1038/s41893-022-00955-z
-    Lyubich (2024). The Role of People vs. Places in Individual Carbon Emissions, Working Paper
-    Sager, L. (2019). Income inequality and carbon consumption: Evidence from Environmental Engel curves. Energy Economics, 84, 104507. doi: 10.1016/j.eneco.2019.104507

Inequality in climate policy impacts

Papers:
-    Cronin, J. A., Fullerton, D., & Sexton, S. (2019). Vertical and Horizontal Redistributions from a Carbon Tax and Rebate. Journal of the Association of Environmental and Resource Economists. doi: 10.1086/701191
-    Douenne, T. (2020). The Vertical and Horizontal Distributive Effects of Energy Taxes: A Case Study of a French Policy. Energy Journal, 41(3), 231–254. doi: 10.5547/01956574.41.3.tdou
-    Muehlegger, E., & Rapson, D. S. (2022). Subsidizing low- and middle-income adoption of electric vehicles: Quasi-experimental evidence from California. Journal of Public Economics, 216, 104752. doi: 10.1016/j.jpubeco.2022.104752

Inequality in climate impacts

-    Cohen, F., & Dechezleprêtre, A. (2022). Mortality, Temperature, and Public Health Provision: Evidence from Mexico. American Economic Journal: Economic Policy, 14(2), 161–92. doi: 10.1257/pol.20180594
-    Gandhi, S., Kahn, M. E., Kochhar, R., Lall, S., & Tandel, V. (2025). Adapting to Flood Risk: Evidence from a Panel of Global Cities. Working Paper
-    Park, J., Pankratz, N. M. C., & Behrer, A. (2021). Temperature, Workplace Safety, and Labor Market Inequality. IZA Working paper. doi: 10.2139/ssrn.3892588

General
-    Drupp, M. A., Kornek, U., Meya, J., & Sager, L. (2021). The Economics of Inequality and the Environment. doi: 10.2139/ssrn.3979352 Journal of Economic Literature, forthcoming

Lecture 4: Local Pollution

Short-term impacts

Papers:
-    Barwick, P. J., Li, S., Rao, D., & Zahur, N. B. (2024). The Healthcare Cost of Air Pollution: Evidence from the World's Largest Payment Network. Review of Economics and Statistics, 1–52. doi: 10.1162/rest_a_01430
-    Deryugina, T., Heutel, G., Miller, N. H., Molitor, D., & Reif, J. (2019). The Mortality and Medical Costs of Air Pollution: Evidence from Changes in Wind Direction. American Economic Review, 109(12), 4178–4219. doi: 10.1257/aer.20180279
-    Aragón, F. M., & Rud, J. P. (2016). Polluting Industries and Agricultural Productivity: Evidence from Mining in Ghana. Economic Journal, 126(597), 1980–2011. doi: 10.1111/ecoj.12244
-    Schlenker, W., & Walker, W. R. (2016). Airports, Air Pollution, and Contemporaneous Health. Review of Economic Studies, 83(2), 768–809. doi: 10.1093/restud/rdv043

Long-term impacts

Papers:

-    Bishop, K. C., Ketcham, J. D., & Kuminoff, N. V. (2023). Hazed and Confused: The Effect of Air Pollution on Dementia. Review of  Economic Studies, 90(5), 2188–2214. doi: 10.1093/restud/rdac078
-    Grönqvist, H., Nilsson, J. P., & Robling, P.-O. (2020). Understanding How Low Levels of Early Lead Exposure Affect Children’s Life Trajectories. Journal of Political Economy. doi: 10.1086/708725
-    Isen, A., Rossin-Slater, M., & Walker, W. R. (2017). Every Breath You Take—Every Dollar You’ll Make: The Long-Term Consequences of the Clean Air Act of 1970. Journal of Political Economy. doi: 10.1086/691465

Lecture 5: The effectiveness of anti-pollution regulations

Environmental markets and subsidies
Papers:

-    Shapiro, J. S., & Walker, R. (2018). Why Is Pollution from US Manufacturing Declining? The Roles of Environmental Regulation, Productivity, and Trade. American Economic Review, 108(12), 3814–54. doi: 10.1257/aer.20151272
-    Fowlie, M., Holland, S. P., & Mansur, E. T. (2012). What Do Emissions Markets Deliver and to Whom? Evidence from Southern California's NOx Trading Program. American Economic Review, 102(2), 965–93. doi: 10.1257/aer.102.2.965
-    Hernandez-Cortes, D., & Meng, K. C. (2023). Do environmental markets cause environmental injustice? Evidence from California’s carbon market. Journal of Public Economics, 217, 104786. doi: 10.1016/j.jpubeco.2022.104786
-    Greenstone, M. &. Pande, R & Sudarshan, A and Ryan, N. (2023). Can Pollution Markets Work in Developing Countries? Experimental Evidence from India. Warwick Economics Research Paper Series (TWERPS). Forthcoming at The Quartely Journal of Economics. Retrieved from  ttps://ideas.repec.org/p/wrk/warwec/1453.html
-    Hanna, R., Duflo, E., & Greenstone, M. (2016). Up in Smoke: The Influence of Household Behavior on the Long-Run Impact of Improved Cooking Stoves. American Economic Journal: Economic Policy, 8(1), 80–114. doi: 10.1257/pol.20140008

Command-and-Control policies
Papers:

-    Klauber, H., Holub, F., Koch, N., Pestel, N., Ritter, N., & Rohlf, A. (2023). Killing Prescriptions Softly: Low Emission Zones and Child Health from Birth to School. American Economic Journal: Economic Policy. doi: 10.1257/pol.20210729
-    Barahona, N., Gallego, F. A., & Montero, J.-P. (2020). Vintage-Specific Driving Restrictions. Review of Economic Studies, 87(4), 1646–1682. doi: 10.1093/restud/rdz031

Information

Papers:
-    Barwick, P. J., Li, S., Lin, L., & Zou, E. Y. (2024). From Fog to Smog: The Value of Pollution Information. American Economic Review, 114(5), 1338–81. doi: 10.1257/aer.20200956
-    Greenstone, M., He, G., Jia, R., & Liu, T. (2022). Can Technology Solve the Principal-Agent Problem? Evidence from China's War on Air Pollution. American Economic Review: Insights, 4(1), 54–70. doi: 10.1257/aeri.20200373

Lecture 6: Deforestation, Ecosystem services and Biodiversity

Deforestation: drivers and mitigation options

Papers:
-    Burgess, R., Hansen, M., Olken, B. A., Potapov, P., & Sieber, S. (2012). The Political Economy of Deforestation in the Tropics*. Quarterly Journal of Economics, 127(4), 1707–1754. doi: 10.1093/qje/qjs034
-    Baragwanath, K., & Bayi, E. (2020). Collective property rights reduce deforestation in the Brazilian Amazon. Proceedings of the National Academy of Sciences, 117(34), 20495–20502. doi: 10.1073/pnas.1917874117
-    Kraus, S., Liu, J., Koch, N., & Fuss, S. (2021). No aggregate deforestation reductions from rollout of community land titles in Indonesia yet. Proceedings of the National Academy of Sciences, 118(43), e2100741118. doi: 10.1073/pnas.2100741118
-    Alix-Garcia, J., & Millimet, D. (2022). Remotely Incorrect? Accounting for Nonclassical Measurement Error in Satellite Data on Deforestation. Journal of the Association of Environmental and Resource Economists. doi: 10.1086/723723

Ecosystem services and the social cost of biodiversity losses

Papers:
-    Taylor, C. A., & Druckenmiller, H. (2022). Wetlands, Flooding, and the Clean Water Act. American Economic Review, 112(4), 1334–63. doi: 10.1257/aer.20210497
-    Tristan Earle Grupp, Prakash Mishra, Mathias Reynaert, Arthur A. van Benthem (2024). An Evaluation of Protected Area Policies in the European Union. Working Paper
-    Dasgupta, Partha. (2021). The Economics of Biodiversity: The Dasgupta Review. Abridged Version.
-    Frank, E., & Sudarshan, A. (2024). The Social Costs of Keystone Species Collapse: Evidence from the Decline of Vultures in India. American Economic Review., 114(10), 3007–40. doi: 10.1257/aer.20230016
-    Fezzi, C., Ford, D. J., & Oleson, K. L. L. (2023). The economic value of coral reefs: Climate change impacts and spatial targeting of restoration measures. Ecological Economics, 203, 107628. doi: 10.1016/j.ecolecon.2022.107628

Lecture 7: Environment and Development

The impact of economic development on environmental quality

Papers:
-    Jayachandran, Seema. (2022). "How Economic Development Influences the Environment." Annual Review of Economics, vol. 14, no. 1, pp. 229-52, doi:10.1146/annurev-economics-082321-123803.
-    Hanna, R., & Oliva, P. (2015). Moving Up the Energy Ladder: The Effect of an Increase in Economic Well-Being on the Fuel Consumption Choices of the Poor in India. American Economic Review, 105(5), 242–46. doi: 10.1257/aer.p20151097
-    Szerman, Dmitri, et al. (2022). Agricultural Productivity and Deforestation: Evidence from Brazil. Working Paper. EliScholar – A Digital Platform for Scholarly Publishing at Yale, elischolar.library.yale.edu/egcenter-discussion-paper-series/1091.

Instruments reconciling environmental and developmental objectives
Papers
-    Jack, B. K., Jayachandran, S., Kala, N., & Pande, R. (2025). Money (Not) to Burn: Payments for Ecosystem Services to Reduce Crop Residue Burning. American Economic Review: Insights, 7(1), 39–55. doi: 10.1257/aeri.20230431
-    Jayachandran, S. (2023). The inherent trade-off between the environmental and anti-poverty goals of payments for ecosystem services, Environmental Research Letters, 18: 025003.

The specificities of environmental regulation in developing countries

Papers:
-    Berkouwer, S. B., & Dean, J. T. (2022). Credit, Attention, and Externalities in the Adoption of Energy Efficient Technologies by Low-Income Households. American Economic Review, 112(10), 3291–3330. doi: 10.1257/aer.20210766
-    Assunção, J., Gandour, C., & Rocha, R. (2023). DETER-ing Deforestation in the Amazon: Environmental Monitoring and Law Enforcement. American Economic Journal: Applied Economics, 15(2), 125–56. doi: 10.1257/app.20200196
-    Duflo, E., Greenstone, M., Pande, R., & Ryan, N. (2013). Truth-telling by Third-party Auditors and the Response of Polluting Firms: Experimental Evidence from India. Quarterly Journal of Economics, 128(4), 1499–1545. doi: 10.1093/qje/qjt024
-    Duflo, E., Greenstone, M., Pande, R., & Ryan, N. (2018). The Value of Regulatory Discretion: Estimates From Environmental Inspections in India. Econometrica, 86(6), 2123–2160. doi: 10.3982/ECTA12876
-    Oliva, P. (2015). Environmental Regulations and Corruption: Automobile Emissions in Mexico City. Journal of Political Economy. Retrieved from https://www.journals.uchicago.edu/doi/full/10.1086/680936

Lecture 8: Political Economy and determinants of Environmental Attitudes

Norms, beliefs and environmental attitudes

Papers:
-    Andre, P., Boneva, T., Chopra, F., & Falk, A. (2025). Misperceived Social Norms and Willingness to Act Against Climate Change. Review of Economics and Statistics, 1–46. doi: 10.1162/rest_a_01468
-    Douenne, T., & Fabre, A. (2022). Yellow Vests, Pessimistic Beliefs, and Carbon Tax Aversion. American Economic Journal: Economic Policy, 14(1), 81–110. doi: 10.1257/pol.20200092
-    Severen, C., & van Benthem, A. A. (2022). Formative Experiences and the Price of Gasoline. American Economic Journal: Applied Economics, 14(2), 256–84. doi: 10.1257/app.20200407

The political economy of climate and environmental policy

Papers
-    Hungerman, D., & Moorthy, V. (2023). Every Day Is Earth Day: Evidence on the Long-Term Impact of Environmental Activism. American Economic Journal: Applied Economics, 15(1), 230–58. doi: 10.1257/app.20210045
-    Colantone, I., Di Lonardo, L., Margalit, Y., & Percoco, M. (2024). The Political Consequences of Green Policies: Evidence from Italy. American Political Science Review, 118(1), 108–126. doi: 10.1017/S0003055423000308
-    Anderson, S., Marinescu, I., & Shor, B. (2023). Can Pigou at the Polls Stop Us Melting the Poles? Journal of the Association of Environmental and Resource Economists. doi: 10.1086/722970

Lobbying, NGOs and the media

Papers:
-    Beattie, G. (2025). Measuring Social Benefits of Media Coverage: How Coverage of Climate Change Affects Behaviour. Economic Journal, 135(666), 455–486. doi: 10.1093/ej/ueae067
-    Espinosa, R., & Treich, N. (2021). Moderate Versus Radical NGOs†. American Journal of Agricultural Economics, 103(4), 1478–1501. doi: 10.1111/ajae.12156
-    Araujo, R., Costa, F., & Garg, T. (2024). Going Viral: Public Attention and Environmental Action in the Amazon. Journal of the Association of Environmental and Resource Economists. doi: 10.1086/731080
-    Beattie, G. (2020). Advertising and media capture: The case of climate change. Journal of Public Economics, 188, 104219. doi: 10.1016/j.jpubeco.2020.104219