Essays at the Intersection of Environment and Development Economics

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Essays at the Intersection of Environment and Development Economics

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Title: Essays at the Intersection of Environment and Development Economics
Author: Walker, Elizabeth Ruth
Citation: Walker, Elizabeth Ruth. 2015. Essays at the Intersection of Environment and Development Economics. Doctoral dissertation, Harvard University, Graduate School of Arts & Sciences.
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Abstract: The three essays in this dissertation explore how households in Southern Africa interact with and rely upon environmental resources. The first chapter examines the relationship between irrigation dam placement and local infant health outcomes. Irrigation dams can enable farms to harness considerable water resources, and this has been critical to increasing the global food supply. However, irrigation consumes 70 percent of global water resources and returns polluted water back into river systems. I examine the effect of irrigation dams on water pollution and infant health outcomes in South Africa. To remove bias associated with non-random dam placement, I utilize an instrumental variables approach that predicts dam placement using geographic features and time-varying policy changes. I find that each additional dam within a district increases both water pollution and infant mortality. In districts downstream from dams, alternately, dams generate smaller water pollution effects and reduce infant mortality, though magnitudes are much smaller. I argue that this pattern is consistent with pollution-induced health costs that outweigh economic benefits within the districts that receive dams. Downstream, however, pollution generates smaller costs and the economic benefits dominate. Exploring other plausible channels through which irrigation dams may affect infant mortality, I find that while irrigation dams generate substantial effects on district employment and small effects on migration, these factors do not appear to explain the health outcomes observed. Instead, the results suggest that water pollution and reduced water availability may contribute to higher infant mortality near agricultural activity.
The second chapter in this dissertation explores technology adoption of trees with environmental benefits, in the context of a field experiment in Zambia. As context, many technology adoption decisions are made under uncertainty about the costs or benefits of following through with the technology after take-up. As new information is realized, agents may prefer to abandon a technology that appeared profitable at the time of take-up. Low rates of follow-through are particularly problematic when subsidies are used to increase adoption. This chapter uses a field experiment to generate exogenous variation in the payoffs associated with taking up and following through with a new technology: a tree species that provides fertilizer benefits to adopting farmers. Our empirical results show high rates of abandoning the technology, even after paying a positive price to take it up. The experimental variation offers a novel source of identification for a structural model of intertemporal decision making under uncertainty. Estimation results indicate that the farmers experience idiosyncratic shocks to net payoffs after take-up, which increase take-up but lower average per farmer tree survival. We simulate counterfactual outcomes under different levels of uncertainty and observe that subsidizing take-up of the technology affects the composition of adopters only when the level of uncertainty is relatively low. Thus, uncertainty provides an additional explanation for why many subsidized technologies may not be utilized even when take-up is high.
Finally, the third paper in my dissertation explores the role that mineral wealth has on local economic outcomes. Mineral wealth has been central to the development of the South African economy. However, we have little evidence regarding how it has affected employment and poverty. This paper explores how within-country variation in mineral wealth affects district-level outcomes. Using data on mineral deposits and historical world prices, I construct a plausibly exogenous variable reflecting district-level aggregate mineral wealth, and I use variation in this index to evaluate economic outcomes over three Census rounds (1991, 1996, 2001). In the short run, I show that positive shocks to aggregate mineral wealth generate higher employment, largely driven by increased mining employment. This increase in mining is accompanied by reductions in agricultural employment and slight reductions in manufacturing employment. On average, adult age individuals also report working more hours and earning higher salaries in districts experiencing higher mineral prices. In sum, mineral wealth shocks generate benefits to districts, with less households below the poverty line.
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