Political Economy of the Environment
Paper Session
Saturday, Jan. 4, 2025 10:15 AM - 12:15 PM (PST)
- Chair: Victoria Xie, Santa Clara University
Economic Analysis of Government Incentives to Provide Environmental Goods: The Case of the U.S. National Park Service
Abstract
How and when governmental agencies choose to preserve and protect land to provide for natural habitat, wilderness, and environmental and cultural amenities is not well understood. Policymakers and agency officials respond to various incentives including those related to political considerations, budgets, and intrinsic motivation. In this paper we examine the U.S. National Park Service (NPS) to understand how political considerations, the incentive to increase agency size, agency identity, and changes in consumer demand affect the provision of public goods. A key challenge in this type of empirical work is the nature of governmental agency budgets, which are modified incrementally, have large categories of expenditures linked together, and occur infrequently. The NPS offers a unique empirical setting, providing annual line-item budgets, area, employment, and visitation statistics for each of its 419 park units, which allows us to assemble a 100-year panel of NPS budgets from archives and Congressional testimony. We provide two stages of analysis. First, matching park location data to socioeconomic, demographic data, we demonstrate how NPS added units, especially National Historic Sites and National Recreation Areas, near population centers to secure popular support. Second, we show that budget allocations are not responsive to visitation but do increase for parks overlapping Congressional Districts with committee members responsible for appropriating funds to the NPS. These results demonstrate that park budgets are allocated to grow the agency, maintain popular and congressional support, and protect the image/identity of the service.The Political Economics of Corporate Environmentalism: Climate Disclosures in the Age of ESG Reporting
Abstract
Increasingly, countries and subnational jurisdictions—from the United Kingdom and New Zealand to India, to Hong Kong, and recently to California—require firms that operate in their jurisdictions to disclose carbon emissions and climate-related risks. The plethora of climate disclosure mandates worldwide signal that policymakers and investors alike perceive climate disclosures as driving actions that protect the environment. Some firms while not others have emerged as supporters for climate disclosure mandates and other government policies that incentivize decarbonization. How does corporate governance interact with the political economy to drive firms’ climate (non-)disclosures? Under what firm-level managerial and organizational and external political economy conditions influence firm behavior and reduce carbon emissions? Unlike the extant literature, this paper situates firms in a political economic framework whereby firms are key players in a nested structure of climate change governance with interactions between bottom-up and top-down agents, incentives, and institutions involving corporate, regulatory, and global governance. Empirically, this research examines the causal effects of Fortune Global 500 and S&P 500 index firms’ corporate climate disclosures to the CDP (formerly the Carbon Disclosure Project) between 2011 and 2020. Findings from quasi-experiments and discrete-continuous econometric modeling show that senior- and executive-level managers form governing coalitions inside the firm to delineate and mobilize support for corporate environmentalism. When regulatory pressure is high and the marginal cost of self-regulation is low, there is a hastening of efforts led by managers to signal firms’ ability to internalize externalities, earn regulatory goodwill, and avoid costly liabilities. Managers shape, translate, and disseminate global best practices that could someday become market norms or rule of law. The more stringent existing or impending regulation is, the greater the effort is devoted to and the more likely firms engage in costly climate action that leads to environmental performance (i.e., reduced carbon emissions and/or carbon emissions intensity).Greenness and Democracy
Abstract
Green transition policies are not always supported by governments. For one, capabilities and costs of implementing green policies differ considerably between rich and poor countries. Countries with greater civil liberties, political rights and freedoms also appear to favor policies that foster decarbonization compared to more autocratic nations. This raises an important research question: Are democracies more likely to green their economies, and is this effect impacted by the level of per capita income? This question is first explored through an electoral decision model, which shows that whether a democracy proceeds with green transition policies will depend on the share of the public supporting adoption. This outcome may also be influenced by a country’s level of per capita income. This suggests as a hypothesis that the association of electoral democracy with green policies and outcomes is conditioned on the per capita income of an economy. To test this hypothesis, the paper employs a panel analysis of five-year intervals from 1995-2020 for 172 countries. Various indicators of green policy adoption are regressed on cumulative democratic experience, (ln) per capita income, the two variables interacted, and a set of macroeconomic controls. The dependent variables employed include the green share of stimulus and recovery spending, the stringency of climate actions and policies, green export share, renewable share of electricity, carbon emissions per capita and carbon intensity. Cumulative electoral democratic experience up to time t is based on the V-Dem dataset variable v2x_polyarchy and Polity2 as an alternative. The conditioning variable is (ln) per capita income (PWT 10.1). In nearly all regressions, the coefficients of cumulative democratic experience and the interaction term are significant, the marginal effect of democratic experience on green policy adoption is positive, and the marginal effect increases with per capita income. Overall, it is difficult to reject the null hypothesis.Discussant(s)
Zach Raff
,
United States Department of Agriculture
Nilesh Shinde
,
University of Massachusetts-Amherst
Thomas Lyon
,
University of Michigan
Victoria Xie
,
Santa Clara University
JEL Classifications
- D7 - Analysis of Collective Decision-Making
- Q5 - Environmental Economics