Join us as we welcome Prakash Mishra, a candidate for the Nelson Institute’s RISE-EARTH hiring initiative.
Mishra is a PhD candidate at the Wharton School of the University of Pennsylvania. An environmental economist, they use tools from trade and industrial organizations to analyze the joint spatial allocation of environmental and economic activities.
In their talk, Mishra will discuss their recent paper, “The Global Allocative Efficiency of Deforestation.”
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Abstract
This paper quantifies global inefficient and spatially misallocated agricultural deforestation: carbon emissions-intensive deforestation on land with low agricultural yields. I overcome the limitations of a reduced form descriptive analysis by incorporating spatial cost differences, agricultural trade, and cross-country non-agricultural productivity in a trade general equilibrium model to estimate how they contribute to misallocation.
Against a benchmark case with a Pigouvian tax at a $190 per ton social cost of carbon, 97% of carbon emissions from deforestation since 1982 are inefficient. Strikingly, these emissions are produced by only 13% of global agricultural land. Preventing these emissions costs only 7% of status quo agricultural production, yielding welfare gains of $6.6 trillion since 1982.
However, an equity-efficiency tradeoff results: the tax burden falls on the poorest landowners. Lastly, if countries with carbon pricing policy apply these prices to deforestation, they would deliver 5% of emissions reductions achieved under the Pigouvian benchmark.