REES Department Seminar: Dr. Dana Andersen, University of Alberta – Friday, October 6, 2023

Title: The Unintended Environmental Consequences of Investment Stimulus Policy

Speaker: Dr. Dana Andersen, Associate Professor, Department of Economics, University of Alberta

Date: Friday, October 6, 2023

Time: 3:30 – 5:00 PM

Location: 550 General Services Building

Abstract: 

We study the unintended environmental consequences of “bonus depreciation,” one of the largest investment tax incentives in US history. To do so, we pair emissions data from the Toxic Release Inventory and National Emissions Inventory with quasi-experimental policy variation in the extent to which establishments benefited from the policy. Differences-in-differences estimates show bonus depreciation increased annual emissions by 30%.  To quantify aggregate damages associated with the policy we integrate our estimates into a pollution transport model. We estimate overall environmental damages at between $17 and 39 billion per year.  These estimates represent between 56 and 125% of the policy’s annual fiscal cost during the period we study. Damages differ by race and were 75% higher for African-Americans compared to the national average.  Counties subject to more stringent environmental regulations incurred 40% lower damages.