Research

Working Papers

Free Trade and the Formation of Environmental Policy: Evidence from US Legislative Votes (Paper; Online Appendix) [Conditionally Accepted at American Economic Journal: Economic Policy]  - with Jevan Cherniwchan

Abstract: We test the hypothesis that governments alter environmental policy in response to trade. To do so, we study the effects of NAFTA on the formation of environmental policy in the US House of Representatives between 1990 and 2000. Our results indicate that NAFTA reduced political support for the environment, altering outcomes of a third of environmental bills. This is due to: (i) affected districts electing Republicans, and (ii) incumbent Republicans decreasing support for environmental legislation in response to constituent demands. Additional analysis suggests that trade does not cause representatives and constituents to systematically alter their views on other partisan issues.

The Surprising Static and Dynamic Effects of Oil and Gas Flaring on Agriculture  (Paper; Online Appendix) - with Adrian Guerin and Brandon Schaufele

Abstract: Energy producers frequently flare and vent excess gas. We demonstrate that these emissions cause surprising static physiological and dynamic economic spillovers for proximate agricultural operations. Using confidential crop insurance data from Alberta, Canada and local projection estimation, we show that: i) flaring and venting affect current-period productivity of cropland and ii) farmers respond to static productivity shocks by changing investment decisions in subsequent periods. These dynamics occur because of an unintended policy interaction: income tax rules alter farm investment incentives following a revenue shock. As a result, environmental shocks propagate to future farm operations even after the contemporaneous effect abates.

Work in Progress

From Macro to Micro: Decomposing Aggregate Fluctuations with Sample Data - with Jevan Cherniwchan
What Do We Really Know About the Clean-Up of Manufacturing? - with Jevan Cherniwchan and Vincent Thivierge
Seven Facts on the Economics of Flaring and Venting  - with Adrian Guerin, Phuong Ho, and Brandon Schaufele
Market Structure and the Environment: Evidence from Flaring  - with Phuong Ho and Brandon Schaufele

Published Papers

Do Environmental Regulations Affect the Decision to Export? (Paper) [American Economic Journal: Economic Policy, 2022] - with Jevan Cherniwchan

Abstract: This paper investigates how environmental regulations affect the export participation decisions and export volumes of manufacturing plants. We develop a simple theoretical model to show how commonly used air quality regulations can affect which plants export, and by how much, and then test the model's predictions empirically. To do so, we study the effects of the Canada Wide Standards for Particulate Matter and Ozone (CWS) on the export participation decisions and export volume of Canadian manufacturing plants over the period 2004-2010. We exploit the variation in environmental regulation across industries, regions, and time created by the design of the CWS to isolate the causal effects of the policy. Our estimates confirm the predictions of our model: we find that for the plants most affected by the CWS, regulation reduced exports by 42% and the likelihood of exporting by 10%.

Environmental Regulations and the Clean-Up of Manufacturing: Plant-Level Evidence (Paper; Online Appendix) [The Review of Economics and Statistics, 2021] - with Jevan Cherniwchan

Abstract: For much of the industrialized world, pollution from manufacturing has been falling despite increased output. We examine how a common environmental regulation --air quality standards-- have contributed to this "clean-up" of manufacturing. We develop a simple general equilibrium model to show how air quality standards can lead to a clean-up by causing: (i) reductions in plant emission intensity, (ii) relative changes in plant output, and (iii) plant entry and exit. We provide quasi-experimental evidence from Canada to highlight the magnitude of these responses. Our results suggest that air quality standards explain just under 40% of the clean-up of manufacturing.

The WTO Consistency of Carbon Footprint Taxes (Paper) [Georgetown Journal of International Law, 2015] - with Carol McAusland

Abstract: Absent meaningful multilateral action on greenhouse gas emissions, countries wishing to combat climate change must decide whether to take or continue unilateral action. A significant obstacle facing many governments is how to maintain the competitiveness of domestic industries and minimize the leakage of carbon emissions through international trade without violating trade rules. One way to assuage these competitiveness and leakage concerns is to implement destination-based carbon pricing— carbon policy levied at the point of consumption, rather than production. This Article addresses whether one such form of climate policy—a consumption tax levied on the carbon footprint of goods consumed domestically—would be consistent with World Trade Organization (WTO) rules. Because a carbon footprint tax (CFT) would be levied at the point of consumption, goods would be treated equally regardless of whether they are imported or produced domestically. This Article analyzes the legal precedents for a footprint tax and identifies grounds upon which a CFT might possibly be challenged. Our assessment is that the most convincing challenge would be through the likeness criterion. Although the CFT would be a single-rate tax, the effective tax per-unit will vary across goods according to their carbon footprint. As a result, goods that are identical but for differences in their embodied emissions will face different tax burdens; if goods with different embodied carbon are deemed like goods, any variation in the per-unit tax could be interpreted as violating National Treatment. Recent precedents for treating goods as distinct because of consumer tastes and production externalities suggest that high- and low-carbon goods may not be deemed like in the event of a challenge. Nevertheless, we also outline an alternate policy— one which pairs a uniform tax on goods with a consumption subsidy for low-carbon goods—that may survive challenge even if low- and high-carbon goods are deemed like. With the possible exception of likeness, we feel there is sufficient precedent for a footprint tax.

Carbon Footprint Taxes (Paper) [Environmental and Resource Economics, 2015] - with Carol McAusland

Abstract: We analyze whether a carbon consumption tax is logistically feasible. We consider a carbon footprint tax (CFT), which would be modelled after a credit-method value added tax. The basis for the tax would be a product’s carbon footprint, which includes all of the emissions released during production of the good and its inputs as well as any greenhouse gases latent in the product. Our analysis suggests that a pure CFT, requiring the calculation of the carbon footprint of every individual product, may be prohibitively costly. However a hybrid CFT seems economically feasible. The hybrid CFT would give firms the option to either calculate the carbon footprint of their outputs—and have their products taxed based on those footprints—or use product-class specific default carbon footprints as the tax basis, thereby saving on calculation costs. Because the CFT would be levied on all goods consumed domestically, the CFT would keep domestic firms on an even footing with those producing in countries without active climate policy, protecting competitiveness and reducing leakage.