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on Resource Economics |
| By: | Monteiro, Gabriel (Carnegie Mellon University); Severnini, Edson (Boston College) |
| Abstract: | Transportation is a major source of greenhouse gas and air pollution emissions worldwide, with most automobile pollution coming from vehicles older than 10 years. Yet, policies often discourage removing older vehicles from the fleet, with consequences for pollution and public health. This paper examines an equity-motivated anti-scrappage policy in Brazil using a border-pair design exploiting state variation in vehicle tax exemption age thresholds. Using municipality-level vehicle registration data from 2013-2020, we find lower exemption thresholds increase average fleet age by up to one year, encouraging owners to retain vehicles until they qualify for tax exemptions. Using fleet- and satellite-based pollution estimates and administrative health data, we show these policies increase on-road CO2 emissions per capita by up to 23% and PM2.5 concentrations by 4%, while worsening infant health. Leveraging state reforms that raised exemption ages, we find incumbents face greater electoral penalties where more vehicles re-enter the tax base, consistent with a “political environmental trap.†Within an MVPF framework, lowering the exemption age by five years generates a net welfare loss of $0.78 for every $1 of forgone government revenue. |
| Keywords: | vehicle ownership tax, transportation-related local air pollution, infant health, electoral and fiscal outcomes, border-pair approach |
| JEL: | Q53 Q56 Q58 H23 I18 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18898 |
| By: | Nowzohour, Laura; Noailly, Joëlle |
| Abstract: | This paper examines whether environmental policy uncertainty undermines clean-technology investment in the United States by weakening policy-induced investment incentives. Using quarterly project-level data on U.S. greenfield investments from 2007Q1 to 2019Q1, combined with novel news-based indices that separately measure environmental policy salience and environmental policy uncertainty, we find that policy uncertainty substantially offsets the positive investment effects of environmental policy. At the aggregate level, a one-standard-deviation increase in environmental policy uncertainty eliminates roughly 75% of the policy-induced increase in the number of cleantech projects and around 50% of the increase in capital expenditure. The deterrence effect is substantially stronger for foreign than for domestic investors, consistent with greater informational frictions facing cross-border capital. These effects persist for at least two years following an uncertainty shock and are corroborated by country- and firm-level analyses, though results for capital expenditure are less robust at disaggregated levels. The findings imply that policy credibility is a first-order determinant of clean investment: an environmental policy framework that is ambitious but perceived as unstable may fail to mobilize the capital it is designed to attract. JEL Classification: Q58, F21, F23, E22 |
| Keywords: | environmental policy, foreign direct investment, green investment, policy uncertainty |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbwps:20263278 |
| By: | Francesco Paolo Mongelli; Claudio Morana |
| Abstract: | We study the distributional dynamics of extreme weather in Europe and its macroeconomic and financial consequences, distinguishing climate risk from climate uncertainty. Using a balanced panel of forty European countries over 1981-2024 and the E3CI composite index and its seven hazard components, we condition the distribution of extreme weather on anthropogenic radiative forcing and natural climate oscillators, measuring climate risk by the conditional median and climate uncertainty by the conditional interquartile range. Both moments respond nonlinearly to greenhouse gas concentrations. Still, the contribution of natural forcing is asymmetric: climate risk reflects anthropogenic and natural drivers, whereas climate uncertainty is predominantly anthropogenic, with wildfires as the main exception. The post-2010 acceleration in warming is reflected in both moments, although with distinct spatial patterns. Both risk and uncertainty depress economic activity through a common productivity channel: real wages absorb most of the efficiency loss, consumption contracts by more than output, and labor utilization remains largely unchanged. Uncertainty effects are roughly twice as large as risk effects for a typical annual change, and their incidence is governed more by countries' absorptive capacity than by physical exposure, making climate change a source of economic divergence within Europe. In financial markets, climate exposures are concentrated in the uncertainty measures, with the value factor loading negatively on maximum-temperature and wildfire uncertainty and risk. Overall, the evidence is consistent with irreversibility and precautionary behavior as important mechanisms through which climate uncertainty affects macroeconomic activity and asset prices. |
| Keywords: | climate change uncertainty; extreme weather; panel quantile regression; general-to-specific model selection; climate attribution; irreversibility; Fama-French factors; Europe. |
| JEL: | C23 C21 Q54 E32 G12 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:mib:wpaper:581 |
| By: | Behrer, A. Patrick (World Bank); Goodman, Joshua (Boston University); Goyer, J. Parker (College Board); Park, R. Jisung (University of Pennsylvania) |
| Abstract: | Nearly the entire world's population breathes air exceeding WHO pollution guidelines, but the extent to which that exposure impairs the accumulation of human capital is not well understood. We study this using longitudinal PSAT data on nearly 10 million U.S. high school students, comparing the same student's scores across attempts preceded by differing air quality and instrumenting for local PM2.5 with smoke from distant wildfires. A year of observed pollution exposure reduces learning by 0.04-0.06 standard deviations, or 14-19% of typical annual score growth. The damage comes almost entirely from moderate pollution days (8–12 μg/m3), below the EPA's historical standard, and from exposure during the school year rather than summer, pointing to instructional disruption as a mechanism. Effects are three times larger in disadvantaged schools and among Black and Hispanic students, who are harmed more by the same exposure. Exposure to air pollution widens achievement gaps. |
| Keywords: | air pollution, PM2.5, learning, student achievement, wildfire smoke |
| JEL: | I2 I24 Q5 Q53 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18904 |
| By: | Canavire Bacarreza, Gustavo (World Bank); Puerta-Cuartas, Alejandro (Banco de España); Rodriguez Castelan, Carlos (World Bank); Velez-Ospina, Carolina (World Bank) |
| Abstract: | This paper proposes a nonparametric simulation framework to estimate poverty vulnerability under climate shocks. We formalize vulnerability estimation as an out-of-sample prediction problem and show that flexible, regularized machine learning methods for estimating the conditional mean of welfare offer a powerful alternative to conventional linear models. The framework simulates future welfare distributions using historical realizations of climate shocks and household characteristics, enabling the estimation of vulnerability measures and related functions without imposing restrictive parametric assumptions. To interpret the model and quantify heterogeneous impacts, we employ SHapley Additive exPlanations, which decompose predicted vulnerability into contributions from climate shocks and household characteristics. An application to Ecuador reveals a strong geographic concentration of vulnerability and shows that climate shocks act as localized triggers that push marginal households, particularly low-educated informal rural workers into poverty. |
| Keywords: | Poverty Vulnerability, Climate Shocks, Machine Learning. |
| JEL: | I32 I38 C14 C15 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18893 |