We propose a simple indicator for the climate-related transition risks of bank lending based on transaction-level loan data. The underlying idea is that the higher the greenhouse gas intensity of an economic activity, and thus that of the debtor involved, the higher its transition risk. The relationship is mapped through two min-max-normalised functions, each of which represents a scenario for the future characteristics of the green transition. The concept is versatile and applicable to different dimensions at different levels of aggregation (banking system or individual banks, whole economy or specific sectors). As a practical example, we discuss the proposed indicator using Hungarian data for the period 2012–2020.

Energy inefficiency and environmental damages caused by this inefficiency are increasingly common in developing countries. As the largest developing country, China is experiencing a rapid growth in outward foreign direct investment (OFDI). Do OFDI firms have higher energy efficiency in the same sector? After OFDI, how does the energy efficiency of the firms change? In this study, we employ the data from Chinese industrial firms to empirically investigate these questions. Our results show that OFDI firms have higher energy efficiency and total factor energy efficiency (TFEE) relative to non-OFDI firms in the same sector. After OFDI, firms improve energy efficiency and TFEE through expanding output scale. In addition, these effects are found to be heterogeneous in terms of energy types as well as OFDI motivations and destinations. In general, this study provides some initial evidence for the relationship between OFDI and energy performance at the firm level.

We examine a common pool resource (CPR) where appropriations deteriorate the quality of the resource and, thus, its impact on the exploitation of the CPR. We focus on two settings: (i) firms use the CPR without abatement efforts, and (ii) abatement is allowed. We provide comparisons between these two settings and identify socially optimal appropriation levels. We find that (i) higher quality of the CPR could induce firms to overuse the resource, and (ii) first-period appropriations with abatement decrease in the regeneration rate. However, abatement induces an overuse of the resource when the quality of the CPR improves.

With the green, circular, and low-carbon concept, eco-industrial parks are regarded as key drivers for maximizing environmental and economic benefits. Based on the panel data of 276 cities in China from 2007 to 2018, this paper regards the establishment of eco-industrial parks as a quasi-natural experiment, and employs the difference-in-differences method to test the impact of eco-industrial parks on urban haze pollution. We find that eco-industrial parks significantly reduce urban haze pollution and the conclusion holds with robustness tests. Heterogeneity analysis shows that the effect of eco-industrial parks on haze pollution is more pronounced in eastern and resource-based cities. Finally, mechanism analysis indicates that eco-industrial parks reduce urban haze pollution mainly by promoting technological innovation, upgrading industrial structure, and strengthening urban environmental regulations.

The so-called credibility revolution dominates empirical economics, with its promise of causal identification to improve scientific knowledge and ultimately policy. By examining the case of rural electrification in the Global South, this opinion paper exposes the limits of this evidence-based policy paradigm. The electrification literature boasts many studies using the credibility revolution toolkit, but at the same time, several systematic reviews demonstrate that the evidence is divided between very positive and muted effects. This bifurcation presents a challenge to the science-policy interface, where policymakers, lacking the resources to sift through the evidence, may be drawn to the results that serve their (agency's) interests. The interpretation is furthermore complicated by unresolved methodological debates circling around external validity as well as selective reporting and publication decisions. These features, we argue, are not particular to the electrification literature but inherent to the credibility revolution toolkit.

Almost 40 per cent of Brazil's native vegetation is located on over five million private properties. This study assesses the potential of agricultural land taxes and tradable forest certificates for conserving Brazil's fragmented native vegetation across commercial farms, using micro census data from 2006 and 2017. We explore the variability of optimal tax rates and market prices for forest certificates, revealing a supply-demand imbalance in the Amazon and high sensitivity of conservation outcomes to changes in farmland opportunity costs, especially in productive areas. Despite a more positively skewed distribution of opportunity costs by 2017, market outcomes remained unaffected. Notably, expanding the market to include the Amazon's agricultural frontier microregions could achieve 45 per cent of the conservation target. Our analysis underscores the interplay between market-based conservation mechanisms and regional agricultural economics, highlighting the need for tailored approaches to optimize conservation efforts.

The EU's non-financial reporting (NFR) regulations have significant impacts on Global South stakeholders, firms that must report, actors lower in the value chain, and organisations seeking investment from NFR-compliant firms or institutions. This paper sets forth six proposals to improve the global equity and sustainability implications of the EU's NFR from a Global South perspective. The proposals involve (1) developing regulation cooperatively with the Global South; (2) streamlining reporting to enable the regulations to have real effects and limit incorrect accounting; (3) digitalising reporting through accessible technologies for greater accountability and lower administrative burdens; (4) mandating scope 3 emissions accounting and incentivising related investment; (5) anchoring financial institutions' role in ethical investment and bridging Northern and Southern actors; and (6) strengthening citizen data and sustainability literacy to close the circle of incentives, implementation, and impact.

The impact of cyclones on assets and sales of manufacturing firms in India is examined econometrically using data on manufacturing companies for 2008–2019. We find that there is about a 4–6 per cent dip in sales and a 2–3 per cent dip in total assets of manufacturing firms following a cyclone incident in the district where the firms' plants are located. The fall in sales is bigger for relatively small-sized firms. For multi-plant firms with plants in different states, which are relatively bigger firms, the impact may be small or even negligible. By contrast, cyclones cause a fall in total assets for both big and small firms. The adverse effect of cyclones on sales and assets of manufacturing firms is relatively less for firms with a high trade-technology orientation. We also find that cyclones significantly raise the risk of business failure among manufacturing plants, more so among small plants.

Stunting, a manifestation of chronic malnutrition, is widespread in India. This, coupled with biased preferences of parents towards their eldest sons, has led to stunting and underweight among girls that grows sharply with increasing birth order. We study the impact of an environmental water pollutant on child growth outcomes in arsenic contaminated regions of India. Using a large, nationally representative household survey and exploiting variation in soil textures across districts as an instrument for arsenic, we find that arsenic exposure beyond the safe threshold level is negatively associated with height-for-age and weight-for-age. Negative effects are larger for girls who are born at higher birth orders relative to the eldest. This, we argue, suggests that the lack of adequate nutrition and health care during early childhood can make girls more vulnerable to external environmental hazards due to their lower immunity and underdeveloped bodies.

We examine the effects of mining booms in Indonesia on labor market outcomes using exogenous price changes and 452 mines. We do this using labor force surveys between the years 1998 and 2011, and four waves of individual panel data between 1997 and 2014. Surprisingly, female incomes grow during mining booms, not because women work more, but because their work moves from the agricultural to the service sector where paid work is more common. Men experience mixed labor market changes. High average mining incomes attract male labor to mining districts, allowing for some adjustment of labor supply to demand. Suggestive evidence also shows that informal work increases marginally for men, potentially in auxiliary mining jobs. A male dominated industry that supports economic opportunities for women can unexpectedly benefit women as well.

We explore the theoretical conditions in which natural capital improves explanations of aggregate income growth from factor changes. With positive total factor productivity (TFP) growth, including natural capital better explains growth if natural capital growth rates exceed physical capital growth rates. With negative TFP growth and higher natural capital growth rates, natural capital worsens explanations of growth. Using a comprehensive dataset on natural resource stocks and income shares in GDP, we perform an empirical analysis with 99 countries over three time periods between 2001 and 2015 and find that 41 per cent of country-time periods meet the conditions for improved growth explanation with natural capital. Of these, 59 per cent occur because TFP growth is negative, and physical capital growth exceeds that of natural capital. In these cases, including natural capital simultaneously reduces bias in factor shares and TFP estimates and improves the share of growth explained by changes in factors.

We study household fuel choice in rural China through the lens of social interactions, deploying a structural discrete choice interaction model to explain peer-dependence in household fuel choice. The data comes from the China Family Panel Studies 2010–2020, and we use multiple strategies to examine the robustness of the social interaction effects. We find a significant endogenous social effect, meaning that whether a household chooses non-solid clean fuel for cooking is directly affected by the choice in cooking fuel made by its neighbors in the village. Households with lower non-farm income are more sensitive to the choices of others, and the fuel choices of households with a higher education and/or a higher income attracts more attention from others. Modern communication technologies facilitate information exchange among rural residents, thereby strengthening the endogenous social effect. We suggest that public policies can accelerate rural energy transition by stimulating positive social spillovers.

We use childhood exposure to disasters as a natural experiment inducing variations in adulthood outcomes. Following the fetal origin hypothesis, we hypothesize that children from households with greater famine exposure will have poorer health outcomes. Employing a unique dataset from Bangladesh, we test this hypothesis for the 1974–75 famine that was largely caused by increased differences between the price of coarse rice and agricultural wages, together with the lack of entitlement to foodgrains for daily wage earners. People from northern regions of Bangladesh were unequally affected by this famine that spanned several months in 1974 and 1975. We find that children surviving the 1974–75 famine have lower health outcomes during their adulthood. Due to the long-lasting effects of such adverse events and their apparent human capital and growth implications, it is important to enact and enforce public policies aimed at ameliorating the immediate harms of such events through helping the poor.

Policymakers frequently voice concerns that carbon pricing could impair economic development in the short run, especially in low-income countries such as Uganda. Using a consumer demand system for energy and food items, we assess how households’ welfare, and demand for food and energy, would respond to a carbon price of USD40/tCO2. We find welfare losses of 0.2–12 per cent of household expenditure on food and fuel, due to the carbon price. Average demand for electricity and kerosene decline by 11 and 20 per cent respectively, while firewood demand rises by 10 per cent on average. We observe shifts within food consumption baskets, with declines in the demand for meat & fish, and vegetables, alongside an increase in cereal consumption. Household nutrition is adversely impacted, with declines in protein and micronutrient intake across the population. Complementary social protection policies such as cash transfers are therefore required to ease adverse effects on economic development in Uganda.

This paper analyzes inequities in the distribution of air pollution in Mexico at the detailed scale of localities. We find that air pollution increases in areas that experience a decline in socioeconomic status. We utilize 15 years of remote sensing data on fine particulate matter (smaller than 2.5 microns) for more than 116,500 localities across Mexico. Our panel data models show that localities that face a decline in socioeconomic status experience a 0.24–0.83 per cent increase in annual mean pollution concentrations. Our results hold up to controlling for changes within each municipality and instrumenting with broader municipality level socioeconomic status to test for ecological fallacy. We find that local air pollution inequities are reduced by political participation channels, but not as much by increased share of manufacturing activities due to polluters locating in poorer neighborhoods. Highly dense, urban municipalities witness higher inequities most likely due to traffic, construction, and agricultural fires.