Environmental Session

Paper Session

Saturday, Jan. 7, 2017 10:15 AM – 12:15 PM

Hyatt Regency Chicago, Addams
Hosted By: Econometric Society
  • Chair: Paulina Oliva, University of California-Santa Barbara

Technology Adoption Under Uncertainty: Take Up and Subsequent Investment in Zambia

Paulina Oliva
,
University of California-Santa Barbara
B. Kelsey Jack
,
Tufts University
Samuel Bell
,
Cornell University
Christopher Severen
,
University of California-Santa Barbara
Elizabeth Walker
,
Harvard University

Abstract

Technology adoption often requires investments over time. As new information about the costs and benefits of investment is realized, agents may prefer to abandon a technology that appeared profitable at the time of take-up. This re-optimization can reduce the cost-effectiveness of adoption subsidies. We use a field experiment with two stages of randomization to generate exogenous variation in the payoffs associated with take-up and subsequent investment in a new technology: a tree species that provides private fertilizer benefits to adopting farmers. Our empirical results show high rates of abandoning the technology, even after paying a positive price to take it up. The experimental variation offers a novel source of identification for a structural model of intertemporal decision making under uncertainty. Estimation results indicate that the farmers experience idiosyncratic shocks to net payoffs after take-up, which increase takeup but lower average per farmer tree survival. We simulate counterfactual outcomes under different levels of uncertainty and observe that farmers with high returns are able to self-select at take-up only when the level of uncertainty is relatively low. Thus, uncertainty provides an additional explanation for why many subsidized technologies may not be utilized even when take-up is high.

Long-Term Impacts of High Temperatures on Human Capital and Economic Productivity

Paul Ernesto Carrillo
,
George Washington University
Ram Fishman
,
George Washington University and Tel Aviv University

Abstract

High temperature anomalies have recently been shown to have adverse short-term impacts on multiple health and socio-economic outcomes. A well established literature on the impacts of early life stress on life-long human capital accumulation has led us to hypothesize that high temperature anomalies can also have long-term impacts on economic productivity. Using unique data sets on historical weather and the earnings, place and date of birth of all 1.5 million formal employees in Ecuador, we find that women who have experienced a 1C increase in average temperature while in-utero earn 1.1%-1.7% less as adults. The results are highly robust and suggest warming may already have caused adverse long-term economic losses in the pipeline that have not been appreciated to date.

Estimating Global Agro-Economic Impacts of Geoengineering Using Volcanic Eruptions as Natural Experiments

Solomon Hsiang
,
University of California-Berkeley
Marshall Burke
,
Stanford University
Wolfram Schlenker
,
Columbia University
Jonathan Proctor
,
University of California-Berkeley
Jennifer Burney
,
University of California-San Diego

Abstract

Solar radiation management (SRM) is increasingly considered a realistic, or even necessary, option for managing global temperatures, yet the economic impacts of ameliorating climatic changes by scattering sunlight back to space remain largely unknown. This paper provides the first empirical estimate of the total effect of these stratospheric aerosol-induced changes in temperature, precipitation, cloud cover, and insolation on agricultural yields. While the impacts of SRM's temperature- and precipitation-mediated impacts on global crop yields have been studied, the insolation impacts of stratospheric aerosols on yields have never been empirically estimated. Since photosynthesis tends to decrease with reductions in total insolation and increase with the diffuse fraction, the net impact of scattering incoming light on agricultural yield is ambiguous. Here we estimate the insolation-mediated effect of stratospheric aerosols on global agriculture using the volcanic eruptions that inspired modern SRM proposals as natural experiments. We find that, after flexibly controlling for potentially confounding climate variables, the insolation-mediated impact of stratospheric aerosols on yields is negative for maize, soy, rice and wheat. Further, we find that the insolation effect is less negative for C3 crops than for C4 crops, as well as for aerosols that are more forward scattering. We calculate the total effect of stratospheric aerosols on yields by linking our empirical crop model to a earth system model (ESM), which simulates future temperature, precipitation and cloud cover in both climate change and climate change with SRM scenarios. We find that SRM provides little to no net benefit to global agricultural production because its cooling benefits are offset by similarly-sized insolation-mediated damages. The framework developed in this paper to estimate the direct and indirect effects of SRM on agriculture could be used to analyze other potential impacts, such as those on health, energy production, or labor productivity.

Experimental Evidence on the Impacts of Rural Electrification

Edward Miguel
,
University of California-Berkeley
Ken Lee
,
University of California-Berkeley
Catherine Wolfram
,
University of California-Berkeley

Abstract

Experimental Evidence on the Impacts of Rural Electrification
JEL Classifications
  • Q0 - General