Date/Time
Date(s) - 28/02/2025
11:00 am - 12:30 pm

Dana Andersen, Associate Professor from the University of Alberta, will present to our economics graduate students and faculty on Friday, February 28 in KTH 334!

Dana’s research spans environmental and resource economics, public economics, and sustainable development. He will be presenting, “Environmental Consequences of Investment Stimulus Policy” (joint with Curtis and Orn).

Abstract

We study the environmental consequences of “bonus depreciation,” one of the largest investment tax incentives in US history. To do so, we pair emissions data from the EPA’s Toxic Release Inventory and National Emissions Inventory with quasi-experimental policy variation in the extent to which establishments benefited from the policy. Differences-in- differences estimates show bonus depreciation increased annual emissions by 30%. Using a pollution transport model with fine spatial resolution, we estimate overall environmental damages at between $20 and 45 billion per year. We show that these environmental damages exceed the policy’s stimulus benefits, implying that the investment tax incentive reduces aggregate welfare. The policy was also highly regressive and exacerbated racial inequalities to pollution exposure. We document that the magnitude of the aggregate damages we estimate is due primarily to bonus depreciation’s unintentional targeting of the most emissions-intensive industries. We show that alternative policies can stimulate the same amount of investment and economic growth at a fraction of the environmental cost.

View Dana’s professional website.