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The Environmental Effects of Economic Production: Evidence from Ecological Observations

Author

Listed:
  • Yuanning Liang
  • Ivan J. Rudik
  • Eric Zou

Abstract

The environmental impacts of economic production extend beyond those directly affecting humans. This paper provides new evidence on the link between production and ecosystem decline using a novel dataset that compiles longitudinal ecological sampling information at tens of thousands of locations across the United States between 1960 and 2015. Local shocks in economic production, such as those driven by national military buildups, led to a significant reduction in species abundance, diversity, and stability, with one-third of the observed effects explained by the causal impact of air pollution. Government environmental regulations significantly mitigated production externalities.

Suggested Citation

  • Yuanning Liang & Ivan J. Rudik & Eric Zou, 2021. "The Environmental Effects of Economic Production: Evidence from Ecological Observations," NBER Working Papers 29357, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:29357
    Note: EEE
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    JEL classification:

    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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