A new generation of poverty programs around the globe provides cash payments to poor and vulnerable households. Studies show that these social cash transfer programs create income and welfare benefits for poor households and the local economies where they live. However, this may come at the cost of damaging local environments if cash payments stimulate food production that conflicts with natural resource conservation. Evaluations of the economic impacts of poverty programs do not account for the welfare consequences of environmental impacts, which are potentially large for poor communities closely tied to natural resources. We use an ex-ante policy simulation tool, a bioeconomic local computable general equilibrium model parameterized with microsurvey data, to analyze the expected welfare consequences of environmental degradation caused by a cash transfer program. For a Philippine fishing community that is a net importer of fish, we show that a government cash transfer program initially increases real incomes for all households. However, increased demand for fish leads to a decline in the local fish stock that reduces program benefits. Household groups experience declines in real income benefits of 2–63%, with fishing households suffering the largest declines. Impacts on local fish stocks depend on the extent to which markets link fishing communities to outside regions through trade. Greater market integration can mitigate the fish stock decline, but this reduces the local income benefits of cash transfers.
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Where Is Pollution Moving? Environmental Markets and Environmental Justice
Do US air pollution offset markets disproportionately relocate pollution to or from low-income or minority communities? Concerns about an equal distribution of environmental quality across communities--environmental justice--have growing policy influence. We relate prices and quantities of offset transactions to the demographics of the communities surrounding polluting plants. We find little association of offset prices or offset-induced movements in pollution with the share of a community that is Black or Hispanic or with mean household income. This analysis of 12 prominent offset markets suggests that they do not substantially increase or decrease the equity of environmental outcomes.
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- Award ID(s):
- 1850790
- NSF-PAR ID:
- 10334915
- Date Published:
- Journal Name:
- AEA Papers and Proceedings
- Volume:
- 111
- ISSN:
- 2574-0768
- Page Range / eLocation ID:
- 410 to 414
- Format(s):
- Medium: X
- Sponsoring Org:
- National Science Foundation
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- Free Publicly Accessible Full Text
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Accepted Manuscript1.0
- Journal Article:
- https://doi.org/10.1257/pandp.20211004
