Shiyi Zhang is a PhD student in Economics at Cornell University. Sergey Smirnov is a junior in the College of Arts and Sciences double majoring in Economics and Religious Studies.
NEUDC 2018 hosted two sessions on Environment, Energy, and Resource Economics (EERE), as well as one on Climate Change and one on Conflict. Research in these topics both highlighted the vastness of these topics, as well as contributed to the literature with thoughtful and deep dives into issues ranging from children’s educational attainment in conflict zones to the causal effects of electrification on industrial development.
Importance of energy use in people’s daily lives
Two papers dealt with the effects of programs intended to help people in developing countries get access to energy to improve their welfare. Jörg Peters (with Michael Grimm, Luciane Lenz, and Maximiliane Sievert) looked at people’s willingness to pay for electricity in rural Rwanda and argued that off-grid solar is the preferable technology to reach mass electrification. Using a field experiment in rural Uganda, Stephen Harrell (with Theresa Beltramo, Garrick Blalock, David I. Levine, and Andrew M. Simons) studied the effects of the introduction of fuel-efficient cookstoves on fuelwood use, indoor air pollution, and cooking patterns. They found, quite surprisingly, that the use of fuel-efficient cookstoves is far from effective in improving households’ environmental quality. These studies are relevant for organizations working to develop more effective policies to deal with energy and resource shortage issues in developing countries.
Access to energy boosts economic development
Access to energy is not only beneficial to people’s daily lives butalso leads to economic development. Dana Kassem found that electrification makes the markets more competitive and increases firms’ entrances and exits. This higher firm turnover rate leads to an increase in productivity therefore fosteringindustrial development. Victoire Girard’s research (with Remi Bazillier) discovered positive effects on consumption linked to the mining industry.
While energy and resources offer development opportunities, they also bring significant environmental externalities. This is especially prevalent in developing countries where economic development is prioritized at the expense of sustainability. Russell Toth (with James Macdonald) showed that global palm oil demand substantially increases the likelihood of forest fires in Indonesia, particularly in the areas most suitable for conversion to palm oil. However, the government does a poor job in enforcing laws against burning.
There is a global needfor strong institutions to come up with smart and effective policies to protect the environment while sustaining the rate of development. James Cust (with David Mihalyi) found that countries with weak institutions cannot effectively make use of their resources in order to economically develop. Anca Balietti (with Lucy Page, Rohini Pande, Kevin Rowe, and Anant Sudarshan) found that India’s environmental clearance process reform resulted in unintended deforestation, because it caused a rise in small mines that are environmentally costly. Po Yin Wong (with Torfinn Harding, Karlygash Kuralbayeva, Liana O. Anderson, and Ana M. Pessoa) explored Brazil’s Bolsa Verde program, which pays extremely poor households for forest conservation. They showed that the program reduces deforestation due to social norms and peer effects.
The far-reaching consequences of conflict
The presentations on conflict highlighted the diverse consequences of strife—and the pressing need to understand more about conflict. The three presentations spanned Europe and Africa, addressing violence in Mali, the Democratic Republic of the Congo, and Ukraine. The topics covered the academic performance of children under various food programs (the work of Elisabetta Aurino, Jean-Perde Tranchant, Amadou Sekou Diallo, and Aulo Gelli), the inefficacy of United States “conflict mineral” legislation and the rise of violence in the DRC (by Jeffrey R. Bloem), and how the Russia-Ukraine conflict has molded business behavior in surrounding areas as Ukrainian firms are less willing to trade with their Russian counterparts (Alexey Makarin and Vasily Korovkin). The breadth of topics reinforced the far-reaching consequences of conflict: the effects of conflict can extend from children living in conflict affected areas to distant corporations. The causes of conflict can vary, too: the developed world’s best legislative intentions can have serious unintended negative consequences.
The diverse effects of global warming
Two presentations focused on rainfall, one focused on rising sea levels, and yet another on higher temperatures—consequences of global warming that are very much on the horizon (also discussed in the Food Security post by Joanna Upton, earlier in this series). Farzana Hossain (with Reshad N. Ahsan) presented on the economic consequences of rainfall in rural Indian districts—particularly focusing on spillover effects: the authors discovered that greater rainfall in adjacent districts attenuates the expected household consumption increase resulting from heavy rainfall in one’s own district. Francisco Oteiza (with Fernando M. Aragón and Juan Pablo Rud) studied how the Peruvian agricultural industry reacts to higher temperatures. Their research led them to conclude that short-term temperature increases lead to farmers increasing land and labor inputs, which may be a common coping mechanism for climate change.
The diversity of research on climate change—ranging from infrastructure development to mental health—highlighted the myriad consequences of global warming. As coastal areas become more hazardous due to rising sea levels, Clare Balboni demonstrated the value of national infrastructure investment further away from the coasts. Marc Rockmore (with Mochamad Pasha and Chih Ming Tan) showed the detrimental effects on mental health of individuals exposed to above average levels of rainfall as a child, particularly rural women.
While many of the climate change presentations focused on rural areas, throughout the session several aspects of climate change became crystal clear: the global warming crisis is very much impending and will fundamentally alter the lives of many. The effects will be widely felt in both rural and urban areas, as well as in coastal and inland regions. Therefore, sustainable economic development is an important issue in the future.
