Essays on the Impacts of Environmental Regulation on Firm Behavior.

Abstract

My dissertation is composed of three papers that examine the effects of environmental policies as they relate to firms' decisions. The challenge of crafting environmental policies that achieve their environmental goals without placing an unnecessary burden on the firms that drive economic growth is becoming increasingly acute as concerns over global warming and other environmental issues continue to grow. All three papers in my dissertation examine effects of relatively new approaches to environmental regulation that attempt to accomplish this task.

In the first paper, I analyze the effects of a pollution disclosure and rating program, run by a non-governmental organization in India, on the environmental performance of the country's largest pulp and paper mills. I find that this program drove significant reductions in pollution loadings among dirty plants but not among cleaner ones, and that plants located in wealthier communities were more responsive to these ratings, as were single-plant firms. These findings shed light on the conditions under which information-based regulation may prove effective in improving industrial environmental performance.

In the second paper, I provide the most rigorous empirical analysis to date of the effectiveness of renewable portfolio standards (RPS), which are state-level policies designed to promote investment in renewable electric generating capacity. I introduce a new measure for the stringency of an RPS that explicitly accounts for several important dimensions of RPS heterogeneity. My econometric analysis of state-level panel data suggests that RPS policies have had a significant and positive effect on in-state renewable energy development.

In my third paper, I return to the topic of disclosure, though this time the program I analyze is a government-run program in the United States. In particular, I use unique establishment-level Census micro data to examine how potential entrants' entry decisions changed in response to the creation of the Toxics Release Inventory. I find that on average, counties that were found to be among the dirtiest in the country experienced a decrease in "dirty" plant births and an even larger increase in "clean" plant births. Furthermore, the magnitude of this shift is closely related to per capita income in the affected counties.