[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/upf/upfgen/1469.html
   My bibliography  Save this paper

Firm's response and unintended health consequences of industrial regulations

Author

Listed:
Abstract
Regulations that constrain firms' externalities in one dimension can distort incentives and worsen externalities in other dimensions. In Peru's industrial fishing sector, the world's largest, fishing boats catch anchovy that plants along the coast convert into fishmeal. Matching administrative, daily data on plant production, ground-level air quality data, hospital admissions records, and survey data on individual health outcomes, we first show that fishmeal production negatively affects adult and child health through air pollution emitted by plants. We then analyze the industry's response to a 2009 reform that split the Total Allowable Catch (TAC) into boat-specific, transferable quotas (ITQs) to preserve fish stocks and reduce overcapacity. As predicted by a two-sector model with heterogeneous plants, on average across locations, fishmeal production was spread out in time, for two reasons: (i) boats' incentive to "race" for fish was removed, and (ii) production fell in inefficient plants (and locations) and increased, in the time dimension, in efficient plants (and locations). The reform greatly exacerbated the industry's impact on health, causing a loss of about 1.4 million disability-adjusted life years. We show that the reason is that longer periods of moderate air pollution are worse for health than shorter periods of higher intensity exposure. Our findings demonstrate the risks of piecemeal regulatory design, and that the common policy trade-off between duration and intensity of pollution exposure can be critical for industry's impact on health.

Suggested Citation

  • Christopher Hansman & Jonas Hjort & Gianmarco León, 2015. "Firm's response and unintended health consequences of industrial regulations," Economics Working Papers 1469, Department of Economics and Business, Universitat Pompeu Fabra.
    • Handle: RePEc:upf:upfgen:1469
    as

    Download full text from publisher

    File URL: https://econ-papers.upf.edu/papers/1469.pdf
    File Function: Whole Paper
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Weninger, Quinn, 2008. "Individual fishing quotas in the eastern Gulf of Mexico grouper fishery: fleet restructuring, effort reduction and cost savings," ISU General Staff Papers 200805150700001163, Iowa State University, Department of Economics.
    2. Hanna, Rema & Oliva, Paulina, 2015. "The effect of pollution on labor supply: Evidence from a natural experiment in Mexico City," Journal of Public Economics, Elsevier, vol. 122(C), pages 68-79.
    3. Michael Greenstone & Rema Hanna, 2014. "Environmental Regulations, Air and Water Pollution, and Infant Mortality in India," American Economic Review, American Economic Association, vol. 104(10), pages 3038-3072, October.
    4. Sigbjorn Tveteras & Carlos Paredes & Julio Peña, 2011. "Individual Fishing Quotas in Peru: Stopping the Race for Anchovies," ILADES-UAH Working Papers inv263, Universidad Alberto Hurtado/School of Economics and Business.
    5. Gabriel Natividad, 2016. "Quotas, Productivity, and Prices: The Case of Anchovy Fishing," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 25(1), pages 220-257, March.
    6. Robin Burgess & Matthew Hansen & Benjamin A. Olken & Peter Potapov & Stefanie Sieber, 2012. "The Political Economy of Deforestation in the Tropics," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 127(4), pages 1707-1754.
    7. Eli Berman & Linda T. M. Bui, 2001. "Environmental Regulation And Productivity: Evidence From Oil Refineries," The Review of Economics and Statistics, MIT Press, vol. 83(3), pages 498-510, August.
    8. Emilio Gutiérrez, 2013. "Air quality and infant mortality in Mexico: Evidence from variation in pollution levels caused by the usage of Small-Scale plants," Working Papers 1301, Centro de Investigacion Economica, ITAM.
    9. Orley Ashenfelter & Michael Greenstone, 2004. "Estimating the Value of a Statistical Life: The Importance of Omitted Variables and Publication Bias," American Economic Review, American Economic Association, vol. 94(2), pages 454-460, May.
    10. Esther Duflo & Michael Greenstone & Nicholas Ryan, 2013. "Truth-telling by Third-party Auditors and the Response of Polluting Firms: Experimental Evidence from India," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 128(4), pages 1499-1545.
    11. Avraham Ebenstein, 2012. "The Consequences of Industrialization: Evidence from Water Pollution and Digestive Cancers in China," The Review of Economics and Statistics, MIT Press, vol. 94(1), pages 186-201, February.
    12. Meredith Fowlie & Mar Reguant & Stephen P. Ryan, 2016. "Market-Based Emissions Regulation and Industry Dynamics," Journal of Political Economy, University of Chicago Press, vol. 124(1), pages 249-302.
    13. Janet Currie & Reed Walker, 2011. "Traffic Congestion and Infant Health: Evidence from E-ZPass," American Economic Journal: Applied Economics, American Economic Association, vol. 3(1), pages 65-90, January.
    14. Kenneth Y. Chay & Michael Greenstone, 2003. "The Impact of Air Pollution on Infant Mortality: Evidence from Geographic Variation in Pollution Shocks Induced by a Recession," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(3), pages 1121-1167.
    15. Hammitt James K. & Robinson Lisa A, 2011. "The Income Elasticity of the Value per Statistical Life: Transferring Estimates between High and Low Income Populations," Journal of Benefit-Cost Analysis, De Gruyter, vol. 2(1), pages 1-29, January.
    16. Robert E. Hall & Charles I. Jones, 2007. "The Value of Life and the Rise in Health Spending," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 122(1), pages 39-72.
    17. Hammitt James K. & Robinson Lisa A, 2011. "The Income Elasticity of the Value per Statistical Life: Transferring Estimates between High and Low Income Populations," Journal of Benefit-Cost Analysis, De Gruyter, vol. 2(1), pages 1-29, January.
    18. Matthew Gibson, 2019. "Regulation-Induced Pollution Substitution," The Review of Economics and Statistics, MIT Press, vol. 101(5), pages 827-840, December.
    19. Janet Currie & Joshua Graff Zivin & Jamie Mullins & Matthew Neidell, 2014. "What Do We Know About Short- and Long-Term Effects of Early-Life Exposure to Pollution?," Annual Review of Resource Economics, Annual Reviews, vol. 6(1), pages 217-247, October.
    20. Hilary Sigman, 1996. "Cross-Media Pollution: Responses to Restrictions on Chlorinated Solvent Releases," Land Economics, University of Wisconsin Press, vol. 72(3), pages 298-312.
    21. Kenneth Y. Chay & Michael Greenstone, 2005. "Does Air Quality Matter? Evidence from the Housing Market," Journal of Political Economy, University of Chicago Press, vol. 113(2), pages 376-424, April.
    22. Michael Greenstone & Justin Gallagher, 2008. "Does Hazardous Waste Matter? Evidence from the Housing Market and the Superfund Program," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 123(3), pages 951-1003.
    23. Orley Ashenfelter, 2006. "Measuring the Value of a Statistical Life: Problems and Prospects," Economic Journal, Royal Economic Society, vol. 116(510), pages 10-23, March.
    24. Michael Greenstone, 2002. "The Impacts of Environmental Regulations on Industrial Activity: Evidence from the 1970 and 1977 Clean Air Act Amendments and the Census of Manufactures," Journal of Political Economy, University of Chicago Press, vol. 110(6), pages 1175-1219, December.
    25. Christopher R. Knittel & Ryan Sandler, 2011. "Cleaning the Bathwater with the Baby: The Health Co-Benefits of Carbon Pricing in Transportation," NBER Working Papers 17390, National Bureau of Economic Research, Inc.
    26. Case, Anne & Fertig, Angela & Paxson, Christina, 2005. "The lasting impact of childhood health and circumstance," Journal of Health Economics, Elsevier, vol. 24(2), pages 365-389, March.
    27. Janet Currie & Lucas Davis & Michael Greenstone & Reed Walker, 2015. "Environmental Health Risks and Housing Values: Evidence from 1,600 Toxic Plant Openings and Closings," American Economic Review, American Economic Association, vol. 105(2), pages 678-709, February.
    28. Erica Field, 2007. "Entitled to Work: Urban Property Rights and Labor Supply in Peru," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 122(4), pages 1561-1602.
    29. von der Goltz, Jan & Barnwal, Prabhat, 2019. "Mines: The local wealth and health effects of mineral mining in developing countries," Journal of Development Economics, Elsevier, vol. 139(C), pages 1-16.
    30. Michael Greenstone & John A. List & Chad Syverson, 2011. "The Effects of Environmental Regulation on the Competiveness of U.S. Manufacturing," Working Papers 11-03, Center for Economic Studies, U.S. Census Bureau.
    31. Michael Greenstone & B. Kelsey Jack, 2013. "Envirodevonomics: A Research Agenda for a Young Field," NBER Working Papers 19426, National Bureau of Economic Research, Inc.
    32. Markus Goldstein & Christopher Udry, 2008. "The Profits of Power: Land Rights and Agricultural Investment in Ghana," Journal of Political Economy, University of Chicago Press, vol. 116(6), pages 981-1022, December.
    33. Wayne B. Gray & Ronald J. Shadbegian, 1993. "Environmental Regulation and Manufacturing Productivity at the Plant Level," NBER Working Papers 4321, National Bureau of Economic Research, Inc.
    34. Gianmarco León & Edward Miguel, 2017. "Risky Transportation Choices and the Value of a Statistical Life," American Economic Journal: Applied Economics, American Economic Association, vol. 9(1), pages 202-228, January.
    35. Seema Jayachandran, 2006. "Selling Labor Low: Wage Responses to Productivity Shocks in Developing Countries," Journal of Political Economy, University of Chicago Press, vol. 114(3), pages 538-575, June.
    36. Ling Huang & Martin D. Smith, 2014. "The Dynamic Efficiency Costs of Common-Pool Resource Exploitation," American Economic Review, American Economic Association, vol. 104(12), pages 4071-4103, December.
    37. Lucas W. Davis & Alan Fuchs & Paul Gertler, 2014. "Cash for Coolers: Evaluating a Large-Scale Appliance Replacement Program in Mexico," American Economic Journal: Economic Policy, American Economic Association, vol. 6(4), pages 207-238, November.
    38. Esther Duflo & Michael Greenstone & Rohini Pande & Nicholas Ryan, 2018. "The Value of Regulatory Discretion: Estimates From Environmental Inspections in India," Econometrica, Econometric Society, vol. 86(6), pages 2123-2160, November.
    39. Wolfram Schlenker & W. Reed Walker, 2016. "Airports, Air Pollution, and Contemporaneous Health," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 83(2), pages 768-809.
    40. Laffont,Jean-Jacques, 2005. "Regulation and Development," Cambridge Books, Cambridge University Press, number 9780521549486, September.
    41. repec:cup:cbooks:9780521840187 is not listed on IDEAS
    42. Stephen P. Ryan, 2012. "The Costs of Environmental Regulation in a Concentrated Industry," Econometrica, Econometric Society, vol. 80(3), pages 1019-1061, May.
    43. Michael Greenstone, 2003. "Estimating Regulation-Induced Substitution: The Effect of the Clean Air Act on Water and Ground Pollution," American Economic Review, American Economic Association, vol. 93(2), pages 442-448, May.
    44. Orley Ashenfelter & Michael Greenstone, 2004. "Estimating the Value of a Statistical Life: The Importance of Omitted Variables and Publication Bias," American Economic Review, American Economic Association, vol. 94(2), pages 454-460, May.
    45. Christensen, Villy & de la Puente, Santiago & Sueiro, Juan Carlos & Steenbeek, Jeroen & Majluf, Patricia, 2014. "Valuing seafood: The Peruvian fisheries sector," Marine Policy, Elsevier, vol. 44(C), pages 302-311.
    46. Orley Ashenfelter & Michael Greenstone, 2004. "Estimating the Value of a Statistical Life: The Importance of Omitted Variables and Publication Bias," Working Papers 858, Princeton University, Department of Economics, Industrial Relations Section..
    47. מחקר - ביטוח לאומי, 2006. "Summary for 2005," Working Papers 29, National Insurance Institute of Israel.
    48. repec:pri:cepsud:97ashenfelter is not listed on IDEAS
    49. Tomás Rau & Loreto Reyes & Sergio S. Urzúa, 2013. "The Long-term Effects of Early Lead Exposure: Evidence from a case of Environmental Negligence," NBER Working Papers 18915, National Bureau of Economic Research, Inc.
    50. Enrico Moretti & Matthew Neidell, 2011. "Pollution, Health, and Avoidance Behavior: Evidence from the Ports of Los Angeles," Journal of Human Resources, University of Wisconsin Press, vol. 46(1), pages 154-175.
    51. Boyce, John R., 2004. "Instrument choice in a fishery," Journal of Environmental Economics and Management, Elsevier, vol. 47(1), pages 183-206, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Achyuta Adhvaryu & Prashant Bharadwaj & James Fenske & Anant Nyshadham & Richard Stanley, 2024. "Dust and Death: Evidence from the West African Harmattan," The Economic Journal, Royal Economic Society, vol. 134(659), pages 885-912.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Christopher Hansman & Jonas Hjort & Gianmarco León, 2019. "Interlinked firms and the consequences of piecemeal regulation," Journal of the European Economic Association, European Economic Association, vol. 17(3), pages 876-916.
    2. Kang, Cheolmin & Ota, Mitsuru & Ushijima, Koichi, 2024. "Benefits of diesel emission regulations: Evidence from the World's largest low emission zone," Journal of Environmental Economics and Management, Elsevier, vol. 125(C).
    3. Gianmarco León & Edward Miguel, 2017. "Risky Transportation Choices and the Value of a Statistical Life," American Economic Journal: Applied Economics, American Economic Association, vol. 9(1), pages 202-228, January.
    4. Gianmarco León & Edward Miguel, 2013. "Transportation choices and the value of statistical life," Economics Working Papers 1389, Department of Economics and Business, Universitat Pompeu Fabra.
    5. Ball, Alastair, 2014. "Air pollution, foetal mortality, and long-term health: Evidence from the Great London Smog," MPRA Paper 63229, University Library of Munich, Germany, revised 25 Mar 2015.
    6. Amini, Amirhossein & Nafari, Kaveh & Singh, Ruchi, 2022. "Effect of air pollution on house prices: Evidence from sanctions on Iran," Regional Science and Urban Economics, Elsevier, vol. 93(C).
    7. Michael Greenstone & B. Kelsey Jack, 2013. "Envirodevonomics: A Research Agenda for a Young Field," NBER Working Papers 19426, National Bureau of Economic Research, Inc.
    8. Siqi Zheng & Matthew E. Kahn, 2013. "Understanding China's Urban Pollution Dynamics," Journal of Economic Literature, American Economic Association, vol. 51(3), pages 731-772, September.
    9. Han, Chao & Tian, Xian-Liang, 2022. "Less pollution under a more centralized environmental system: Evidence from vertical environmental reforms in China," Energy Economics, Elsevier, vol. 112(C).
    10. Ziebarth, N. R. & Schmitt, M. & Karlsson, M., 2013. "The short-term population health effects of weather and pollution: implications of climate change," Health, Econometrics and Data Group (HEDG) Working Papers 13/34, HEDG, c/o Department of Economics, University of York.
    11. Ross Levine & Chen Lin & Zigan Wang, 2018. "Pollution and Human Capital Migration: Evidence from Corporate Executives," NBER Working Papers 24389, National Bureau of Economic Research, Inc.
    12. Karen Clay & Margarita Portnykh & Edson Severnini, 2021. "Toxic Truth: Lead and Fertility," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 8(5), pages 975-1012.
    13. Herrera-Araujo, Daniel & Rochaix, Lise, 2020. "Does the Value per Statistical Life vary with age or baseline health? Evidence from a compensating wage study in France," Journal of Environmental Economics and Management, Elsevier, vol. 103(C).
    14. Guidetti, Bruna & Pereda, Paula & Severnini, Edson R., 2020. "Health Shocks under Hospital Capacity Constraint: Evidence from Air Pollution in Sao Paulo, Brazil," IZA Discussion Papers 13211, Institute of Labor Economics (IZA).
    15. Chen, Jidong & Shi, Xinzheng & Zhang, Ming-ang & Zhang, Sihan, 2024. "Centralization of environmental administration and air pollution: Evidence from China," Journal of Environmental Economics and Management, Elsevier, vol. 126(C).
    16. Guan, Jin & He, Dongwei & Zhu, Qigui, 2022. "More incentive, less pollution: The influence of official appraisal system reform on environmental enforcement," Resource and Energy Economics, Elsevier, vol. 67(C).
    17. Andrea La Nauze & Edson R. Severnini, 2021. "Air Pollution and Adult Cognition: Evidence from Brain Training," NBER Working Papers 28785, National Bureau of Economic Research, Inc.
    18. Wang, Yangjie & Chen, Xiaohong & Ren, Shenggang, 2019. "Clean energy adoption and maternal health: Evidence from China," Energy Economics, Elsevier, vol. 84(C).
    19. Scotton Carol R., 2013. "New risk rates, inter-industry differentials and the magnitude of VSL estimates," Journal of Benefit-Cost Analysis, De Gruyter, vol. 4(1), pages 39-80, March.
    20. Karen Clay & Joshua Lewis & Edson Severnini, 2016. "Canary in a Coal Mine: Infant Mortality, Property Values, and Tradeoffs Associated with Mid-20th Century Air Pollution," NBER Working Papers 22155, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    Industrial regulations; firms; externalities; air pollution; health; fishing; Peru; ITQs;
    All these keywords.

    JEL classification:

    • D2 - Microeconomics - - Production and Organizations
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • L7 - Industrial Organization - - Industry Studies: Primary Products and Construction
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • I1 - Health, Education, and Welfare - - Health
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:upf:upfgen:1469. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: http://www.econ.upf.edu/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.