My research covers topics in environmental economics and industrial organization.
This article examines an unexpected shift in the enforcement practices of environmental regulators in Florida. Using plant-level data from the U.S. manufacturing sector, I find that plants decreased emissions and improved compliance following an increase in penalties for the priority noncompliance group. This relationship is history specific: all noncompliant plants improved performance, while noncompliant plants with a priority history demonstrated the largest response. Estimates of the total decrease in harmful pollutants by these noncompliant plants range from 8-38%. These results are robust to the use of control plants from nearby southern states as well as control plants selected via a matching algorithm. Moreover, these finding suggest that the strategic allocation of regulatory enforcement activity is an important determinant of compliance and emissions in polluting industries.
Defining an enforcement policy is a key component of reducing harmful industrial emissions through regulation, yet there is little empirical evidence for what characterizes an effective strategy. Current policy is characterized by the use of state-dependent enforcement, or steeply increasing penalties according to a firm's previous violation history. However, empirical evaluation of state-dependent enforcement has been hampered by the fact that under this policy, firms respond to both today's penalties and tomorrow's future expected penalties. This paper estimates the effect of state-dependent enforcement on compliance with the Clean Air Act using data on plant-level enforcement, emissions, and investment from the U.S. manufacturing sector. Using a dynamic structural model of firm investment in environmental remediation over time, I examine alternative enforcement strategies for reducing emissions that meet current constraints on the number of inspections, warnings, fines, and penalties collected. I find that: (i) If penalties were no longer dependent on a plant's previous violation history, overall noncompliance would increase from 27% to 33%; (ii) There are significant emissions reductions associated with increasing the penalties for plants with the worst violation history, while lowering the expected penalties for all other plants; and (iii) There would be a modest increase in aggregate emissions if the criteria for firms to receive the maximum penalty was weakened.
Flaring and Health (With Anatolii Kokoza) Draft Available Upon Request
In this paper we quantify the effect of exposure to flared natural gas on health. Using a unique dataset of well location, flaring, weather, and patient level hospital visits with the five digit zip and diagnostic codes for each patient in the state of North Dakota. We find that exposure to flared natural gas has a negative causal impact on respiratory health. This result accounts for the endogeneity of flaring exposure by using the number of upwind wells connected to a constrained processing plant as an instrument. These results inform current policy debates on the benefits of restrictions on natural gas flaring and the externalities associated with oil activity.