Evaluating Emissions Reductions through the Regional Greenhouse Gas Initiative: A State and Plant-Level Analysis
by Nicholas Vassilios Papavassiliou
Abstract
In this study, I examine the impact of the Regional Greenhouse Gas Initiative (RGGI) on emission reductions in the electricity sector, focusing on three critical dimensions. First, I analyze temporal trends in emissions reductions to evaluate whether previously demonstrated progress has slowed as states exhaust low-cost mitigation pathways. Second, I assess regional impacts within electricity grid management areas, particularly the Pennsylvania-Jersey-Maryland Interconnection Regional Transmission Organization (PJM ISO) where participating and non participating states coexist, including investigating emissions leakage where reductions in RGGI states are offset by increases in neighboring non-RGGI states. Third, I extend the analysis to other greenhouse gases and co-pollutants. Employing difference indifferences and synthetic control methods, the findings show that the RGGI has a significant on the intensive margin, significantly reducing operating hours and heat input across all types of power plants. Alongside these reductions, RGGI spurs net facility exits and promotes fuel switching toward lower-carbon sources. As a result, both pollutant intensity and aggregate emissions decline over time, underscoring the program’s effectiveness. Examining these shifts in the context of regional electricity grids indicates that comprehensive coverage across interconnected markets can minimize leakage and better achieve environmental objectives, offering insights for the design of future regional climate policies.
Professor Jeffrey DeSimone, Faculty Advisor
Professor Michelle Connolly, Faculty Advisor
JEL Codes: Q41, Q48, Q52, Q58
Keywords: Cap-and-Trade, Emissions Leakage, Environmental Policy, Regional Greenhouse
Gas Initiative
Email for Access to Data
Drought Exposure and the Livestock Forage Disaster Program: Impacts on U.S. Cattle Populations
by Helena Kagan
Abstract
This paper examines the impacts of drought conditions, as defined by the U.S. Drought Monitor (USDM), on U.S. beef cattle inventories between 2000 and 2023. Using a county-level panel dataset and fixed effects models that exploit geographical and time variation in drought exposure, we estimate how additional weeks of various drought severity levels affect annual cattle populations. We find that weeks spent in extreme (D3) and exceptional (D4) drought significantly reduce herd sizes, with D3 associated with an 11-basis point decline and D4 with a 27-basis point decline per week. We assess the interaction between prolonged drought and participation in the Livestock Forage Disaster Program (LFP), a federal disaster assistance program. Results show that LFP payments—especially the 4‐month and 5‐month tiers triggered by extended D3 or D4 drought—partially offset the effects of drought on herd retention. Ultimately, our analysis provides empirical evidence that persistent, high-severity drought reduces cattle inventories, but targeted disaster assistance can mitigate these impacts.
Professor Jeffrey DeSimone, Faculty Advisor
Professor Michelle P. Connolly, Faculty Advisor
JEL Codes: Q18, Q54, Q12
Keywords: Drought, Livestock Forage Disaster Program, Cattle
Religious Identity and Climate-Sustainable Behavior
by Zixin “Finnie” Zhao
Abstract
What motivates individual action on climate change? The study focuses on the potential influence of religious identities. It employs a laboratory experiment to investigate how priming religious identity affects individuals’ donation behaviors to climate versus non-climate charities in a dictator game setting. In contrast with expectations, this study finds no significant evidence that an increase in religious identity salience influences religious individuals’ donation to climate, nor does it affect overall charitable donation behaviors, when demographic factors and perceptions about charity are controlled. Although failing to establish a causal relationship between religious identity and climate sustainable behavior or a linkage between religious identity and pro-social behavior, this research marks an innovative attempt to use experimental economics methodology to study factors that shape individual responses to the global climate challenge.
Professor Rachel Kranton, Faculty Advisor
Professor Michelle Connolly, Faculty Advisor
JEL Codes: C91; D64; Q54; Z12
Blaze of Distrust: The Impact of Wildfires on Social Capital and Governance in Brazilian Amazonia
by Feishi “Alicia” Gong
Abstract
The 2019 wildfire crisis in Brazilian Amazonia not only captured global headlines but also deeply influenced public sentiment towards environmental and political challenges within the country. Trust, a pivotal element of social capital, plays a vital role in shaping a nation’s progress and the well-being of its citizens. This study employs detailed satellite data on wildfire occurrences and survey data reflecting Brazilian public opinion to investigate the nature of fire activity in Brazilian Amazonia, treating it as indicative of organized criminal behavior. Further, it delves into the ramifications of wildfires on the institutional and interpersonal trust of Brazilians. Our findings reveal that wildfires exert a considerable detrimental impact on the trust that local residents place in institutions and each other. These insights underscore the urgency of enhancing environmental protection measures and wildfire management strategies. By doing so, Brazil can bolster its social capital and empower local governments to rebuild and maintain public trust effectively.
Professor Michelle Connolly, Faculty Advisor
JEL Codes: H70, Q23, Q51
Do Green Stocks Get You the Green? Differential Impacts of S&P 500 ESG Index Labels on Firm Stock Prices
by Heera Rajavel
Abstract
On January 28, 2019, the S&P Dow Jones Indices launched the ESG S&P 500 Index, aiming to create a sustainable index fund with a similar risk/return profile to the S&P 500 Index. This study assesses the causal mechanisms behind the performance of the S&P 500 ESG Index by running two difference-in-differences estimations using a panel data set of 698 companies. The first difference-in-differences estimation compares the stock prices of companies on the S&P 500 ESG Index to the stock prices of companies S&P 500 Index, determining if companies on the S&P 500 ESG Index received an “ESG label” price premium. Results show that in the short-term and the long-term, companies on the S&P ESG 500 Index experienced statistically significant negative stock price growth relative to companies only on the general S&P 500 Index; the “ESG label” appears to slow stock growth for companies on the S&P 500 ESG Index by $48.24 in the short-term and $65.29 in the long-term. The second difference-in-differences estimation compares the stock prices of companies on the S&P 500 ESG Index to the stock prices of companies with similar ESG qualifications that are not on an S&P Index, determining if companies in the S&P 500 ESG Index received an “S&P label” price premium. These results found that in both the short and the long run, companies on the S&P 500 ESG Index faced statistically significant positive stock price growth relative to companies with similar ESG qualifications; the “S&P label” seems to increase stock price growth for companies on the S&P 500 ESG Index by $2.19 in the short-term and $7.63 in the long term.
Professor Lawrence Kreicher, Faculty Advisor
Professor Michelle Connolly, Faculty Advisor
JEL Codes: G2, G23, Q56
The True Cost: An Aggregate Analysis of the Advanced Clean Cars II Policy
by Lauren Mackenzie Sizemore
Abstract
Global climate change, emphasis on the global, requires local solutions. Every entity plays a role, some more than others. Yet, when improvements in pollution or emissions in one region leads to more problems in another, how is the net cost or benefit to be deciphered for the environment, for the economy, and for humanity in general? Advanced Clean Cars II (ACC II), a proposed policy in California, United States, is a practical test of this question. For each model year beginning in 2026, the potential law gives a percentage of new vehicle sales that must be zero-emission vehicles (ZEVs) – cars that do not emit exhaust gas or other pollutants from the onboard source of power – or plug-in-hybrid electric vehicles (PHEVs). By 2035, ACC II would require all new vehicles purchased in California to be either a ZEV or a PHEV. With reduced tailpipe emissions, California expects to benefit from reduced smog, less carbon emissions, better air quality, a reduction in air-related health issues such as asthma, and increased sales from California-based electric vehicle companies such as Tesla and Rivian. Since air is a common resource, improving California’s quality also betters air globally. Yet emissions and pollution produced during the mining, production, and scrappage phases work in opposition to the decreased tailpipe emissions. By converting each type of pollutant into a per vehicle dollar cost, I paint a better picture of the global cost-benefit. The per vehicle cost is scaled based on the expected number of electric and conventional vehicles in California which is predicted under two scenarios: ACC II passes with full enforcement and the law is not passed. I forecast the number of electric vehicles likely bought in both instances using the Bass Model for New Product Growth of Consumer Durables (Bass 1969). I determine that a maximum of eighteen states, including California, could successfully implement ACC II and lower emissions given their 2021 electricity grid’s carbon intensity.
Professor Connel Fullenkamp, Faculty Advisor
Professor Michelle Connolly, Faculty Advisor
JEL Codes: Q5, Q51, Q58
Reconstruction following Destruction: Entrepreneurship in the Aftermath of a Natural Disaster
by Richard Lombardo
Abstract
Entrepreneurship is thought to be the engine of growth in many developing countries. There is, however, a paucity of evidence on the role that entrepreneurship plays in rebuilding economic livelihoods both in the short and longer-term in the aftermath of a large-scale shock. This is an important gap in the literature given the increasing frequency and severity of shocks across the globe. This paper contributes to filling that gap by investigating the evolution of entrepreneurial success following the 2004 Indian Ocean tsunami, a large-scale and unexpected shock. Using longitudinal survey data, the Study of the Tsunami Aftermath and Recovery (STAR), I find large declines in business ownership, profits, and capital for those most exposed to the tsunami that persisted through 10 years following the tsunami. These estimates can be given a causal interpretation under the plausible assumption that exposure to the tsunami can be treated as exogenous after taking into account individual-specific unobserved heterogeneity with fixed effects, including pre tsunami geographical features that drove exposure. Individuals living in rural areas and individuals with the least resources pre-tsunami fared the worst in terms of developing new businesses. However, the massive Build Back Better reconstruction program promoted entrepreneurship. Receipt of housing aid as part of that program is linked to an increase in the development of non-agricultural businesses that spurred gains in real profits.
Professor Duncan Thomas, Faculty Advisor
Professor Michelle Connolly, Faculty Advisor
JEL Codes: D1; H84; L26; Q54
The Effect of Algae Blooms on Property Values located on Florida’s Indian River Lagoon
by Cameron DeChurch
Abstract
Florida’s Indian River Lagoon has algae blooms that devastate ecosystems, water quality, and markets for seafood, recreation, and housing. This study estimates part of their economic impact by examining water quality’s relationship with prices of properties sold near the estuary from 2007 to 2016. Using water quality scores from 0 to 100, my regression analysis estimates that one-unit increases in water quality are associated with one-percent increases in sale price. Upon summing this relationship over all properties in the sample, my paper estimates that these algae blooms have cost the housing market between $756 million to $3.6 billion.
Professor Christopher D. Timmins, Faculty Advisor
Professor Kent P. Kimbrough, Faculty Advisor
JEL Codes: Q5, Q51, R21
Short and Long-Term Impacts of a Large-Scale Natural Disaster on Individual Labor Outcomes: Evidence from the 2004 Indian Ocean Tsunami
by Tony Sun
Abstract
Natural disasters are often highly disruptive to the livelihoods of impacted populations. This paper investigates the effects of the 2004 Indian Ocean tsunami on male wages and labor supply from its immediate aftermath into the long run. Using fixed effects models that account for individual-specific heterogeneity, I find evidence of significant real wage declines for workers from heavily damaged areas that persist beyond the short-term. This long-term wage effect contrasts with previous literature, particularly in the context of relatively less severe disasters. Male workers also increased their hours-of-work following the tsunami, which suggests reliance on labor markets to smooth income losses and shifted their labor towards less disrupted industries. Additionally, I document the heterogeneity of tsunami impact on wages and hours-of-work by birth cohort and education, as well as by industry and sector of employment.
Professor Duncan Thomas, Faculty Advisor
Professor Michelle P. Connolly, Faculty Advisor
JEL Codes: J2; J21; J30; O10; Q54
A perfect storm: The effect of natural disasters on child health
by Cheyenne Danielle Quijano
Abstract
Typhoons and their accompanying flooding have destructive effects, including an increase in the risk of waterborne disease in children. Using a spatial regression discontinuity design, I explore the immediate to short-term effects of flooding as a result of Typhoon Labuyo on the incidence of diarrhea and acute respiratory infection in the Philippines by comparing children living in a flooded barangay (town) to children living just outside of the flooded area. I build on the existing literature by accounting for both incidence and intensity of the typhoon’s flooding in my model. I construct this new flooding measure using programming techniques and ArcGIS by manipulating data collected by the University of Maryland’s Global Flood Monitoring System. This data as well as health data from the 2013 Philippines National Demographic Health Surveys were collected the day after Typhoon Labuyo left the Philippines, providing a unique opportunity to explore the immediate impact of the typhoon on child health. Most of my results are insignificant, but subgroup analyses show that the effect of flooding on waterborne disease incidence is less impactful in the immediate term following a flood and more impactful in the medium-term. This is important, because understanding the detrimental health effects of flooding is of utmost importance, especially because climate change will only increase the frequency and intensity of natural disasters.
Professor Erica M. Field, Faculty Advisor
Professor Michelle P. Connolly, Faculty Advisor
JEL Codes: I150, O120, O130, Q540
