Environment and Climate Change

Question 1

What is the climate change-development paradox?

Answer 1

Climate change threatens economic prosperity, especially in low-income countries where it endagers the livelihood and health of vulnerable populations.
Yet, economic change can affect the environment.

Question 2

Give some intuition about climate change being a global externality.

Answer 2

• the cost of climate change are borne by the wolrd at large (social cost > private cost)
• huge dispersion in distribution of (future) costs and (past/present) benefits from GHG emissions
  > brunt of the cost to be borne by the world’s poorest countries
  > while their share of global GHG emissions to date is neglicible

Question 3

Give some intuition about global climate vulnerability.

Answer 3

• SSA as the most vulnerable region globally
• Europe, North Asia, and North America least vulnerable to climate

Question 4

Explain the setup and findings of the paper “agricultural productivity and deforestation in Brazil”.

Answer 4

Method: use exogenous variation in rural electrification in brazil during 1960 - 2000 to identify agricultural productivity shocks
> in locations suitable for hydropower generation, increased crop yields
> credit-constrained farmers shifted away from land-intensive cattle-grazing and into cropping
* Agricultural land use decreased (and the effect persists 25 years after)
* Brazil’s deforestation rate would have been almost twice as large between 1970 and 2000 without this increase

Question 5

What is crop residue burning?

Answer 5

• often occurs in India
• mechanical harvesting of paddy leaves 8 - 12 inches of stalk (stubbles)
• increasing prevalence of crop residue burnin in the last 20 + years
  > causes approximately 30% of air pollution in New Delhi at peak period
  > increases mortality, decreases labor productivity, increase in CO2 emissions

Question 6

What are the finding of the paper “Rural roads, farm labor exits, and crop fires”?

Answer 6

• the expansion of rural road networks in India has enabled labor reallocation away from agriculture and, through this, booested local economin development
• This paper shows that it can also generate negative production externalities&raquo_space; farmers are more likely to use fire to clear residue once agricultural labor becomes scarce
• Also shows that adoption of fires due to rural roads increases infant mortality rates b 5.5% in downwind locations

Question 7

What is the motivation of the paper “Money (not) to burn: Payments for Ecosystem Services to Reduce Crop Residue Burning”.

Answer 7

• Trade off between income and environmental protection:
  > burning crops is much cheaper for farmers than renting crop residue management (CRM) equipment
  > but, mortality costs are worth 200 - 600 times this cost
• Huge welfare gains from eliminating residue burning, but current policies have failed:
  > residue burning has been illegal and punishble by fines in Punjab since 2015, with limited enforcement
  > Indian government allocated funds to Punjab and Haryana to subsidize access to CRM equipment in 2017

Question 8

What is the setup of the paper “Money (not) to burn: Payments for Ecosystem Services to Reduce Crop Residue Burning”?

Answer 8

RCT of payments for Ecosystem Services (PES)
* conditional cash transfer: paying farmers not to burn
* PES offer randomly assigned at the village level:
> in some treatment arms, a portion of the paymnet would be paid upfront and unconditionally
> compare impacts to standard PES contracts, with which credit constraints + distrust may threaten compliance

Question 9

What are the key findings in the paper “Money (not) to burn: Payments for Ecosystem Services to Reduce Crop Residue Burning”.

Answer 9

• Farmers offered partial upfront payment are 8 - 12 pp more likely to comply than those offered standard PES contract
• burning measures derived from satellite imaginery indicate that PES with upfront payments significantly reduced burning
• show that this is a cost-effective way to improve air quality