Three essays on agri-environmental policy and hazardous materials

Abstract

This dissertation consists of three chapters related to policy evaluation, a political economy model-building as well as the estimation of treatment effects.

The first chapter estimates the impact of China's environmental regulation on the hog industry using a new method called synthetic difference-in-differences. Since agricultural water pollution from the livestock industry is a growing concern in China and globally, as opposed to size-based regulations targeting larger facilities in the United States, China’s regulations are place-based. In 2014, China classified eight urban provinces in the southeast as a Development Control Zone (DCZ), which prohibits new hog facilities construction and encourages hog farms to relocate to other regions. Leveraging a novel identification strategy, synthetic difference-in-differences, and the place-based nature of China’s environmental regulations, we provide one of the first systematic analyses of the impacts of the regulations on the county-level hog and sow inventories. By relying on synthetic controls constructed with both county and year weights, synthetic difference-in-differences yields a more accurate and doubly robust estimate of regulations’ treatment effects. Our results show that, on average, the regulations led to an 11.3% reduction in hog inventories after the environmental regulations in the counties in DCZ provinces, mainly resulting from extensive margin changes due to the closures of existing hog farms. This is equivalent to a loss of over 15 million head of pigs or over U.S. $4.4 billion reductions in the DCZ hog sectoral revenue. We also find the treatment effects vary substantially both within and across DCZ provinces: wealthier urban provinces such as Zhejiang experienced a reduction in hog and sow inventories of over 50%, and counties upstream of big cities or those designated as main hog counties saw steeper declines as well.

Based on the heterogeneous effects found in the first chapter, the second chapter builds a theoretical model to explain these findings from the perspective of political economy. In the past 10 years, China's central and local governments switched focus from only economic growth to balancing economic growth and environmental protection. This paper provides a multi-activity tournament competition model to understand the mechanism behind the performance of environmental protection and the corresponding heterogeneous responses. Our models rationalize the phenomenon of more intense environmental protection and less intense focus on gross domestic product and explain the heterogeneous responses across prefectures through the mechanisms of either different unit costs or the existence of abatement spillover. We also empirically test our assumption and model predictions, which are consistent with the empirical evidence.

Different from the previous two chapters, the third chapter focuses on the treatment effects estimation of the pipeline incidents through the Hedonic model. As environmental hazards from energy infrastructure incidents have been a focus of attention, especially since the rapid pipeline expansion due to the domestic shale oil and gas boom, we provide the first nationwide assessment of pipeline incidents' impacts on housing prices using data from 864 gas distribution pipeline incidents and 17 million property transactions from 2010 to 2020 while previous studies focus on individual pipeline incidents. A difference-in-differences analysis finds that a pipeline incident decreases housing prices by 4%--6% on average. We explore the heterogeneous impacts of incidents with different characteristics. These heterogeneous impacts can potentially explain conflicting results from previous studies.