Khyati Malik

My research focuses on studying economically efficient strategies for land-based carbon sequestration. I investigate how agricultural management practices influence long-term soil carbon storage, crop productivity, and farmer decision-making, with the goal of designing carbon payment policies that are both effective and economically sustainable. More broadly, my research examines environmental and energy policy, including renewable energy integration, emissions trading, and the valuation of environmental amenities.

Peer Reviewed Journal Publications

Malik K., Kim S.*, Cultice B. J., The Impact of Remote Work on Green Space Values in Regional Markets, Journal of Housing Economics (2023) (link) (*joint first author)

We investigate the extent to which the increased prevalence of work from home (WFH) due to the COVID-19 pandemic has made green amenities more desirable. We focus on ten major metropolitan statistical areas (MSAs) of the United States and use a hedonic pricing approach to identify changes in the implicit prices of yard space and park proximity. We find that home buyers in most MSAs assigned a greater value to private green amenities in the post-COVID period, but this preference does not correlate with the extent of WFH. Significant heterogeneity was observed in the preference for private green spaces in the post-COVID period.

Karney D. H., Malik K., New Compensating and Equivalent Variation Closed-Form Solutions for Non-Separable Public Goods, Applied Economics Letters (2026) (link)

This study derives closed-form solutions for compensating variation (CV) and equivalent variation (EV) for both marginal and non-marginal changes in public good provision given homothetic, non-separable utility. The CV and EV expressions identify a “relative preference effect” that accounts for observed asymmetries between willingness to pay (WTA) and willingness to accept (WTP), without relying on behavioral assumptions, and a single sufficient statistic summarizes consumer preferences over private and public goods. These expressions provide tractable tools for applied welfare analysis, and we illustrate an application using published WTP estimates of air quality improvements.

Papers Under Review

Dynamics of Global Emission Permit Prices and Regional Social Cost of Carbon Under Noncooperation (with Yongyang Cai and Hyeseon Shin) (link) (Revise and Resubmit, Quantitative Economics)

We develop a dynamic multi-region climate-economy model with emissions trading and solve for the dynamic Nash equilibrium under noncooperation, where each region follows Paris Agreement-based emissions caps. The permit price reaches $923 per ton of carbon by 2050, and global temperature rises to 1.7 degrees Celsius above pre-industrial levels by 2100. The regional social cost of carbon equals the difference between regional marginal abatement cost and the permit price, highlighting complementarity between carbon taxes and trading. We find substantial heterogeneity in regional social costs of carbon, show that lax caps can raise emissions, and demonstrate strong free-rider incentives under partial participation.

Optimal Carbon Payments and Adoption Under Soil Carbon Sequestration: An Analytical Characterization (link)

This paper derives closed-form expressions for carbon payment schemes that incentivize the adoption of conservation practices for soil carbon sequestration. The analytical results closely match those obtained from a stochastic Markov decision process framework, while offering the advantage of mathematically precise relationships between payment design and underlying parameters. The analysis reveals that minimum carbon payments decline sharply as the sequestration rate accelerates, underscoring the importance of promoting technologies that speed up carbon accumulation as a policy lever. Optimal payments vary significantly across soil types. Flat payment schemes result in long breakeven periods, whereas front-loaded schemes can substantially shorten the breakeven horizon. The framework yields conditions that guarantee incentive-compatibility for the latter class of schemes as the payment stream diminishes over time.

Stock or Flow? Carbon Payment Designs for Soil Carbon Sequestration

The design of carbon payments determines whether farmers store soil carbon long-term. I derive closed-form minimum payment conditions for five designs and show which sustain sequestration. Designs that reward incremental carbon fail structurally: without penalties for carbon release, the payment rises without bound as soils approach saturation and farmers cycle rather than accumulate carbon. Paying for the maintained stock, conditional on continued conservation, is the design that sustains adoption, minimizing payments and limiting the additionality problem. Lifetime payments stay below the US social cost of carbon for three of four soil types, and spatial targeting cuts program costs by 22%.

Work in Progress

Crop Insurance and the Adoption of Carbon-Sequestering Conservation Practices (with Christopher R. Knittel and Jiyoung Lee)

Federal crop insurance and conservation programs both shape how farmers manage risk, yet they are rarely studied together. Conservation practices that store carbon in soil can alter yield variability, and insurance coverage changes how much of that risk a farmer bears. This project examines whether crop insurance reinforces or weakens the incentive to adopt such practices, with implications for the design of agricultural climate policy.

Ramping Up Emissions? The Implications of Intermittent Renewables for Thermal Power Plant Pollution

Policymakers increasingly advocate renewable energy to reduce emissions and enhance air quality. However, intermittent solar and wind power require conventional plants to frequently ramp output, causing inefficiencies and increased nitrogen oxide (NOx) emissions. This study offers the first empirical, multi-state analysis of ramping-induced emissions in the U.S. from 2010 to 2021. Results indicate ramping significantly elevates NOx emissions, notably in late afternoons, exacerbating ozone issues. Older plants and solid-fuel EGUs show greater emissions penalties. Thus, managing ramping externalities through fuel shifts, battery storage, demand management, and flexible generation is crucial for aligning renewable integration strategies with climate and air quality goals.

Soil to Savings: Optimal Farmer Compensation for Carbon Sequestration Services in the Midwest United States

The objective of this research is to assess if there is a viable market for soil carbon sequestration in the Midwest region of the United States. Second, I evaluate the tradeoffs between crop yield and soil carbon sequestration. I develop an infinite horizon model in which farmers maximize their lifetime utility while undertaking decisions about carbon sequestration practices. Farmers are compensated for the sequestered carbon. To determine the model parameters, I use field data and also perform biophysical simulations of crop growth and carbon sequestration using the Environmental Policy Integrated Climate (EPIC) model. This work is discussed in a December 2025 post by Economics That Really Matters.

Refereed Book Chapters

"Farmer Adoption and Payment Design Under Risk: Variability in Soil Carbon Sequestration Across Conservation Practices", in T. Deryugina and B. K. Goodwin (eds.), Risk and Risk Management in the Agricultural Economy, University of Chicago Press (2026, forthcoming) (NBER Working Paper 34902).
"Climate Change and Coupled Human and Natural Systems" (with S. Gopalakrishnan and K. Zhu), Routledge Handbook of Climate Change and Society, 2nd Edition.

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