nep-res New Economics Papers
on Resource Economics
Issue of 2024‒07‒22
two papers chosen by

  1. Environmental Damage News and Stock Returns: Evidence from Latin America By Cavallo, Eduardo A.; Cepeda, Ana; Panizza, Ugo
  2. Factors Influencing the Decline of Manufacturing Pollution in the European Union: A Study of Productivity, Environmental Regulations, Expenditure, and Trade Costs By Sahar Amidi; Rezgar Feizi

  1. By: Cavallo, Eduardo A.; Cepeda, Ana; Panizza, Ugo
    Abstract: This paper studies the interplay between environmental performance and financial valuation of firms in Latin America and the Caribbean. We provide insights into how environmental considerations are integrated into financial decision-making and investor behavior by analyzing the stock market reaction to environmental news of firms with different levels of carbon emission intensity. We find that high emission intensity firms tend to underperform after the release of environmental damage news. Our baseline estimates indicate that, after the release of such news, firms at the 75th percentile of the distribution of emission intensity experience stock returns that are 17% lower than those of firms at the 25th percentile of the distribution of emission intensity. These results suggest that investors care about and price carbon risk, but only when this risk is salient.
    Keywords: Carbon emissions;climate change;Environmental news;Stock returns
    JEL: G12 G14 G18 G32 G38 Q54
    Date: 2024–05
  2. By: Sahar Amidi (Université d'Orléans); Rezgar Feizi (University of Luxembourg)
    Abstract: This paper investigates how various factors affect pollution levels in Europe’s manufacturing industry. The paper explores how productivity, expenditure share, trade cost, and environmental regulations affect pollution levels in Europe’s manufacturing industry. The World Input-Output Database provides data on global and local pollution for each industrial sector solely for the period ranging from 1995 to 2009. We use a general equilibrium model and quantitative trade model that considers pollution as a byproduct of production. The study aims to examine the effectiveness of regulations and control for the primary causes of environmental pollution (the main causes). Our empirical results reveal that air pollution emissions from EU manufacturing decreased by 33.21 percent despite an 85.44 percent increase in real manufacturing output. This outcome could provide evidence for the role of reducing the pollution contamination of manufacturing. The study finds that most of the decrease in emissions can be ascribed to changes in environmental regulations, rather than changes in expenditure share, trade cost, and productivity. Increasing environmental regulations by 20 percent can eliminate emissions intensity. After increasing environmental regulations by 20%, the emission of global pollutants such as methane decreased by 17.27% in 2009.
    Keywords: Environmental account and accounting, environmental taxes, general equilibrium model, productivity, quantitative model, technological innovation, trade cost
    JEL: Q
    Date: 2024

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