Environmental Justice EC 434/534 University of Oregon PDF

Environmental Justice EC 434/534 University of Oregon Emmett Reynier Fall 2024 Housekeeping... Here's what's coming the rest of the course Week 9 Last lecture with new content Environmental Justice (today) Thanksgiving break Week 10 Project presentations are Tuesday...

Environmental Justice EC 434/534 University of Oregon Emmett Reynier Fall 2024 Housekeeping... Here's what's coming the rest of the course Week 9 Last lecture with new content Environmental Justice (today) Thanksgiving break Week 10 Project presentations are Tuesday Thursday we'll do final exam review Final exam is Monday, December 9th 12:30-2pm Course surveys are available this week--please take them, I value your feedback on the course! 2 / 36 Any news you'd like to discuss? 3 / 36 Introduction This slide deck based on content from Danae Hernandez-Cortes 4 / 36 Environmental Justice It is well established that more polluted places are also... Poorer Have more minorities Sources: Banzhaf, Ma, and Timmins (2019) and Currie, Voorheis, and Walker (Forthcoming, AER) 5 / 36 This is not a new idea While injustice has existed beyond, modern EJ work began in the late 70's Bullard 1979: Hazardous waste site in Houston GAO 1983: 3/4 waste sites in southeastern US located in Black communities 6 / 36 What is Environmental Justice? Environmental justice is the fair treatment and meaningful involvement of all people regardless of race, color, national origin, or income, with respect to the development, implementation, and enforcement of environmental laws, regulations, and policies. (EPA) Environmental justice is achieved when no group experiences a disproportionate share of a policy's negative environmental consequences. 7 / 36 Why do these inequities exist? Do environmental inequities arise because Polluters get away with locating near disadvantaged households? Disadvantaged households face unequal opportunities and public services? Pollution policies disproportionately affect disadvantaged households? All of these are likely to be happening in aggregate. 8 / 36 Documenting disparities 9 / 36 Pollution decreasing in US As we have discussed, PM 2.5 has decreased across the US, in addition to other types of pollutants such as SO , N O , various water pollutants. 2 X Source: Colmer et. al. (Science, 2020) 10 / 36 But there are differences by race Black households have experienced a higher level of pollution than white Source: Currie, Voorheis, and Walker (Forthcoming, AER) 11 / 36 United Church of Christ (1987) Seminal study documenting exisiting disparities nationally... Race proved to be the most significant variables in association with the location of commercial hazardous waste facilities. In communities with the largest landfills and polluting facilities, the average minority percentage of the population was more than three times that of communities without facilities. 12 / 36 Is it an income story? No, POC experience most pollution Source: Tessum et. al (Science, 2021) 13 / 36 Mechanisms 14 / 36 Why study mechanisms? Helps to narrow the reson of injustice Is it based on actions by firms? Is it political participation in permitting? Is it differences in enforcement? Understanding the causal channels is crucial for designing policies to reverse the observed correlations Banzhaf, Ma, and Timmins (2019) review four mechanisms 1. Disproportionate siting by firms 2. Households "coming to the nuisance" 3. Coasean bargaining 4. Discriminatory politics of enforcement 15 / 36 1. Disproportionate Siting Reasons why firms may more freqently site close to minorities: Discrimination: firms might have a preference for protecting whites from pollution or have a preference to harm other groups. Economic Conditions: Firms might site their pollution activity based on local economic conditions that are correlated in space with residential demographic patterns. Permitting: Government agencies might make decisions that affect the location of such facilities, perhaps through the permitting process or other incentives that steer firms to such locations. 16 / 36 Evidence on siting Wolverton (2009): TRI plants are more likely to locate in census tracts with (currently) lower household income But...we must consider demographics at time of decision, not current demographics Variables traditionally considered in the firm location literature – such as land and labor costs, the quality of labor, and distance to rail – are significant. No evidence of race/income of residents as a factor once these other economic characteristics are controlled for 17 / 36 2. Coming to the nuisance Consders pollution as a given and considers the possibility that households move based on their willingness to pay Application of Tiebout's (1956) residential sorting: Recall lecture on revealed preferences Households choose a location subject to a budget constraint considering all amenities. Households prefer nicer neighborhoods so their demand for such neighborhoods is higher: increases price of housing Households reveal their WTP through higher housing costs. General equilbrium effects can cause environmental injustice! Why? 18 / 36 Implications of sorting 1. If sorting explains disparate exposure to pollution, this might push income to be the reason of environmental inequities. 2. Cleaning locally polluted areas might increase the demand for local housing, bidding up housing prices: “environmental gentrification” Environmental gentrification Chicken-or-the-egg: what came first, siting of facilities in a minority/poor community or the sorting of such households near pollution? (Very) Hard to test empirically. 19 / 36 Coming to the nuisance evidence Banzhaf & Walsh (2008): evidence consistent with Tiebout's sorting and ammenity gentrification. Wang et al. (2021): Facilities are more likely to relocate from communities with high pop. density, income and education. Facilities with expectations of emissions growth are more likely to relocate. Relocating facilities tend to move into communities with lower population density, income, and education. Bankkensen & Ma (2020): evidence that low income and minority residents are more likely to move into high risk flood zones. 20 / 36 3. Coasean bargaining Negotiation to enable the right to pollute (or not have pollution). Property rights will end up in the hands of the individuals or firms who value it most, and all parties will be compensated for any damages. 1. Firms have preferences over where to locate their industrial facilities and willingness to pay to locate at a certain place. 2. Households have tolerance for pollution. 3. From a Coasean perspective, there is an opportunity for trade: residents can agree to some level of pollution in exchange of compensation: cash transfers, local jobs, investment in public goods, etc. This mechanism goes together with procedural justice: ability to participate in decision-making over environmental amenities in local communities. 21 / 36 Bargaining evidence Timmins & Vissing (2017): Study leases signed between shale operators and households in Texas for the rights to extract natural gas. Race and English-speaking are correlated with lease terms (like protective clauses) and royalty compensation. Jenkins, Maguire & Morgan (2004): citizen participation in host fee negotiations leads to greater host compensation. Hamilton (1993): communities better able to organize politically are less likely to see local firms expand their processing of hazardous waste. 22 / 36 4. Politics and enforcement Governments can affect the distribution of pollution in many ways: Legislation Bureaucratic monitoring Pollution monitoring Enforcement Regulators could be a source of inequitable exposure to environmental nuisances. Households with the high income might be able to organize or influence government decisions This mechanism talks both to procedural justice and exposure justice. 23 / 36 Politics evidence Lavelle & Coyle (1992): Polluters accused of violating environmental regulations faced lower enforcement penalties if located near communities of color Cleanup times are longer and cleanup solutions less stringent near POC. Gray & Shadbegian (2004), Shabegian & Gray (2012): Examine the determinants of regulatory stringency in communities near polluting facilities. Collective action is important determinant of regulatory stringency. 24 / 36 Other Mechanisms Discrimination from landlords and landowners Do landlords restrict access to rentals based on race? Christensen, Sarmiento, and Timmins (2020) perform an audit study, sending inquiries to property owners, varying the race of requester Significantly lower response rate for minority sounding names than for white sounding names, but only for places with low levels of pollution. 25 / 36 Other Mechanisms Information about pollution sources Hausman & Stolper (2021): Hidden pollution leads to pollution inequality This inequality arises when households sort according to known pollution and other disamenities that are positively correlated with hidden pollution. 26 / 36 Policy alternatives 27 / 36 How can policy reduce inequality? Important to analyze the policy incidence Ex-ante there is a gap in environmental exposure Do environmental policies reduce or increase the gap? Hard to do without causal inference Is a policy targeting facilities located near POC? Are facilities regulated by the policy icreasing or decreasing emissions? Without the policy, emissions would have increased or decreased? Lots of new work in this area! 28 / 36 CAA reduced gap in PM 2.5 Recall from earlier, gap in black vs white PM 2.5 exposure Attribute 60% of the decline in the gap to the CAA. Source: Currie, Voorheis, and Walker (Forthcoming, AER) 29 / 36 Market based policies How can market based policies (i.e. cap and trade) lead to EJ concerns? Market has control over where reductions come from, not guaranteed to be equitable If plants with higest MAC are closer to minority neighborhoods, then policy exacerbates EJ gap (could also be the opposite) Evidence RECLAIM (Cap and trade program for air pollutants in So Cal): Neighborhood demographics are not correlated with emissions reductions (Fowlie, Holland, Mansur 2012) Offset Markets: No association between demographics and offset quantities or prices (Shapiro and Walker 2021) 30 / 36 C&T and the EJ Gap: Theory 31 / 36 California Cap and Trade California's Assembly Bill 32 established a state-wide cap and trade program for GHG's starting in 2013 Goal: Return to 1990 level by 2020 (hit four years early) Goal v2.0: 40% below 1990 by 2030 GHGs ofen co-emitted with local pollutants Faced political opposition on EJ grounds Hernandez-Cortez and Meng (2023) investigate the EJ effects of this program Separate effect of program from other macroeconomic factors and overlapping policies affecting emissions Must map changes in emissions to changes in amient pollutant concentrations 32 / 36 C&T reverses EJ gap growth 33 / 36 C&T reverses EJ gap growth 34 / 36 Conclusion 35 / 36 Conclusion Disadvantaged communities sytematically face greater exposure to pollution Many different mechanisms play a role in creating this gap Recent policies have led to a decrease in the EJ gap EJ implications should be considered alongside traditional Cost-Benefit Analysis when evaluating policies 36 / 36