Conference Agenda

We study the relationship between corporate taxation and carbon emissions in the U.S. We show that dirty firms pay lower profit taxes. This relationship is driven by dirty firms benefiting disproportionately more from the tax shield of debt due to their higher leverage. In addition, we document that the higher leverage of dirty firms is fully accounted for by the larger share of tangible assets owned by such firms. We build a general-equilibrium multi-sector economy and show that a revenue-neutral increase in profit taxation could lead to large decreases in aggregate carbon emissions without any noticeable change in GDP.

This paper exploits the operation of a sea wall built to protect the city of Venice from increasingly high tides to provide evidence on the capitalization of public infrastructure investment in climate change adaptation into housing values. Properties above the sea wall activation threshold experience a permanent reduction in flood risk and expected damages, which are reflected in higher prices. Using a difference-in-differences hedonic design we show that the sea wall led to a 4.5% increase in the value of the residential housing stock in Venice, which is a lower bound on the total welfare gains generated by the infrastructure.

We study the link between exposure to pollution information and investment portfolio allocations, exploiting the rollout of air quality monitoring stations during 2006-2019 in India. Using a triple-difference framework, we show that retail investors' investments in ``brown'' stocks become more negatively related to local air pollution after a monitoring station appears nearby. Since green stocks do not outperform brown stocks over this period, we suggest that our findings are likely driven by investor tastes and pollution salience rather than a shift in expected returns.The effect of pollution information on investment choices is most prominent amongst tech-savvy investors who are most plausibly ``treated'' by real-time pollution data, and by younger investors who tend to be more sensitive to environmental concerns. Overall, our results provide micro-level support for the view that salience of environmental conditions affect investors' tastes for green versus brown investments.