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Environmental Governance

Paper Session

Sunday, Jan. 4, 2026 8:00 AM - 10:00 AM (EST)

Philadelphia Convention Center, 303-B
Hosted By: Association of Environmental and Resource Economists
  • Chair: Jeremy Foltz, University of Wisconsin-Madison

Land Ownership and the Provision of Public Goods

Yukiko Hashida
,
University of Georgia
Frederik Noack
,
University of British Columbia

Abstract

Forests provide some of the most important environmental benefits, including timber, biodiversity, and greenhouse gas (GHG) sequestration - yet these benefits are only imperfectly captured by forest owners. While private owners mainly capture timber benefits, public owners may also consider the public goods forests provide and manage forests accordingly. Variations in forest management practices, particularly harvesting and herbicide application, can significantly affect ecological outcomes, warranting empirical analysis based on spatially explicit economic and ecological data. This study leverages the privately obtained fine-scale spatial data on timber harvesting and herbicide use over 25 years to estimate: 1) the impact of forest ownership on forest management practices, 2) the ecological consequences of management for biodiversity, and 3) the implications for GHG sequestration. To identify the causal effect of forest ownership on management, we build our analysis on the historical "checkerboard" land allocation in the Pacific Northwest that emerged from privatizing alternating public land survey sections in wide buffers along railroad lines. We find that private ownership is associated with substantially higher harvest rates, consistent with predictions from optimal rotation models in the presence of positive externalities. Herbicide use is also significantly greater on private lands, reflecting more intensive efforts to suppress native vegetation on private land relative to public land. These different management practices have substantial consequences for the external benefits of forests, including biodiversity. We find that timber harvesting on private land reduces bird diversity, an effect only partially explained by herbicide use. In contrast, timber harvesting on public land has no negative consequences for bird diversity. Our findings underscore a trade-off between private benefits and public goods provision. While privatization may increase the provision of private goods such as timber, it may do so at the expense of biodiversity and other non-market ecosystem services.

Threshold Effects of Extreme Heat on Schooling and Child Labor in Rural Bangladesh

Mehrab Bakhtiar
,
International Food Policy Research Institute

Abstract

Identifying threshold effects of extreme heat is key to understanding the true scale of climate-related risks to human capital development. This paper investigates how extreme heat shapes adolescent schooling and labor outcomes in rural Bangladesh, combining household survey data on adolescents with high-resolution temperature records to estimate the effects of prior-year, cumulative, and early-life heat exposure. We identify a precise temperature threshold at 36°C, above which each additional day reduces school attendance by 3.1 percentage points and increases child labor by 2.5 percentage points. Below this threshold, moderate heat (30-36°C) shows minimal single-year effects, though cumulative exposure over three years reveals significant negative impacts, indicating limited household adaptation. Effects are disproportionately concentrated among girls, who shift primarily toward household work rather than wage labor. Three interconnected mechanisms drive these effects: heat-induced income shocks (11% reduction in household income), increased domestic labor demands from heat-related illness, and restrictive gender norms that magnify girls’ household responsibilities. Extending the analysis to early-life conditions, exposure during the first 1,000 days also reduces adolescent schooling probability by 3.4-3.8 percentage points, with strongest effects at ages one and two. Boys show slightly larger early-life effects, contrasting with girls’ greater vulnerability to contemporaneous exposure, suggesting distinct mechanisms operating through biological development versus gendered household labor allocation. The findings point to both immediate income-mediated responses and long-term developmental pathways, with implications for temperature-triggered social protection, school infrastructure investments, and early-life health interventions.

Perverse Incentives Created by Tree Protection Ordinances

Alecia Cassidy
,
University of Alabama
David Bernstein
,
Federal Energy Regulatory Commission

Abstract

Since 2000, the United States has seen a rapid proliferation of municipal tree protection ordinances, with over 750 cities adopting one by 2024. Yet, little is known about the efficacy of these policies, and no prior literature speaks to the economic incentives they create. In particular, approximately 63% of ordinances utilize trunk diameter-based thresholds to preserve larger trees. These thresholds could result in landowners strategically cutting down trees before they reach protected status to avoid future regulatory hurdles and preserve option value associated with potential development. Focusing on one such ordinance in Austin, TX, our study is the first to document bunching in the distribution of tree removal permits for protected tree species on private land just below cutoff diameters, indicating preemptive cutting. We estimate that 5-6% of permits just below diameter thresholds are due to preemptive cutting. We do not find evidence of tree preservation or dishonest claims of dead, hazardous, or encroaching trees.

Decentralization and Environmental Regulation: Evidence from China's Legislative Decentralization Reform

Zhenhuan Lei
,
Shanghai Jiao Tong University
Yuanning Liang
,
Peking University
Jianwei Xing
,
Peking University
Shilong Zhuang
,
Peking University

Abstract

This paper studies how decentralized legislative authority affects environmental outcomes, focusing on water quality in China. While concerns about regulatory competition and weak enforcement have cast doubt on the efficacy of decentralized governance, local governments may possess informational advantages that enable more targeted and effective regulation. We examine a 2015 amendment to China’s Legislative Law that granted lawmaking authority to over 275 additional prefecture-level cities, enabling a sharp expansion in local environmental legislation. We compile a novel city-month panel spanning 2004–2023 that links all water-related environmental laws issued at the prefectural and provincial levels with high-frequency surface water monitoring data and enforcement records. To identify causal effects, we exploit the staggered rollout of legislative authority as an instrument for local lawmaking activity. Our empirical strategy employs an interactive fixed effects estimator that accounts for city-specific unobservables, temporal shocks, and provincial policy spillovers. We find that cities newly empowered to legislate and that enacted environmental laws experienced significant improvements in water quality. On average, the share of swimmable water (Grades I–III) increased by 43–54%, while the share of heavily polluted water (worse than Grade V) declined by 6–29%. Enforcement intensity—measured by water-related administrative punishments and fines—also rose sharply following law enactments, consistent with a mechanism of increased regulatory action. Textual analysis of the laws reveals that effectiveness is driven by higher-quality legislation: laws with more detailed liability provisions and less duplication of central statutes yield larger improvements. Our findings demonstrate that legislative decentralization, when paired with local institutional capacity, can lead to substantial environmental gains. These results contribute to a growing literature on the political economy of environmental regulation and offer policy insights into the design of multi-level governance systems.

Discussant(s)
Amy Ando
,
Ohio State University
Tihitina Andarge
,
University of Massachusetts-Amherst
Dalia Ghanem
,
University of California-Davis
Jeremy Foltz
,
University of Wisconsin-Madison
JEL Classifications
  • Q5 - Environmental Economics
  • K3 - Other Substantive Areas of Law