As cloud computing and artificial intelligence expand rapidly, data centers are becoming a large and rapidly growing source of new U.S. electricity demand. This article reviews emerging research on the environmental and electricity-cost consequences of data center growth. Environmental consequences, particularly emissions from electricity generation, depend on how much, where, and when electricity is consumed. We then examine ratepayer incidence: how the costs of serving large, concentrated new loads—through generation, transmission, and distribution investments—are allocated across ratepayer classes. We conclude by reviewing policy responses in tariff design, cost allocation, and utility planning, and identifying key gaps in the literature.

We study how firms and labor contracts shape workers’ adaptation to climate risk. Using real-time GPS and AI driver-monitoring data on truck drivers, we show that extreme heat impairs driving performance and that drivers adapt to it. We exploit a unique setting in which drivers work either as independent owner-operators, who pay their own operating costs, or as company employees, whose costs the firm bears. Owner-operators suffer adverse effects about twice as large as those for employees. Employees use more cabin cooling yet rest less and withdraw less labor on hot days. Firms appear to steer how much their employees adapt and on which margins. We build and quantify a model that accounts for the wedge between the firm’s and the worker’s valuation of adaptation, and for the firm’s optimal steering decision. We decompose the observed behavioral difference into cost-sharing and steering channels, and simulate how behavior changes when the externality is accounted for in drivers’ decisions.

Who bears the costs when technological change requires new infrastructure? By linking U.S. data center entry from 2010 to 2024 to electric utilities’ prices, investments, and regulatory outcomes, we find that data center entry raises average retail rates by 2.7% and residential retail rates by 2.1%. Effects are concentrated among investor-owned utilities (5.6% on average) and are larger in restructured electricity markets. Infrastructure investment and utilities’ authorized rate bases increase, but price effects are lower where utilization improves. These findings suggest that the incidence of infrastructure-intensive technological change depends on system conditions and the institutions governing investment and cost recovery.

Instrumental variables are often used to address measurement error in air pollution exposure. This paper shows why that logic can fail when thermal inversion instruments are paired with satellite-based PM2.5. IV recovers the effect of true pollution only if proxy error is uncorrelated with the instrument. Using monitor, satellite, reanalysis, and meteorological data, we show that satellite PM2.5 error is strongly predicted by thermal inversions. In a crime application, satellite-based proxies materially change IV estimates despite strong first stages. The key diagnostic is whether proxy error is orthogonal to the identifying variation.

We study climate adaptation in a distorted electricity market in one of the world’s most heat-exposed cities, Karachi, Pakistan. Poor households respond to extreme heat by increasing unbilled consumption or theft, exploiting limited enforceability and nonlinear tariffs. This adaptation amplifies pre-existing distortions: as temperatures rise, cost recovery deteriorates, further straining a sector characterized by load shedding and unreliable supply. Theft-resistant cables, a corrective measure installed by the electricity utility, mitigate heat-driven unbilled consumption, improving reliability and increasing electricity use among non-residential consumers. Billed consumption does not increase proportionally, implying reduced cooling and higher health expenditures among poor households.

This paper studies air pollution IV estimates when instruments move several pollutants simultaneously and provides diagnostic tools for interpreting them. We distinguish two interpretations: a stimulus effect of the named pollutant holding co-pollutants fixed, and a proxy effect of the pollution bundle indexed by that pollutant. An empirical evaluation shows that adding controls, swapping the focal pollutant, or jointly instrumenting multiple pollutants can still leave nontrivial bias. We derive conditions under which single- and multi-pollutant IV estimates support either interpretation and provide a framework for quantifying bias when they do not. A crime application illustrates the framework.

This paper investigates the potential cost of natural gas expansion when electrification is a long-term goal. I provide empirical evidence that natural gas expansion shifts consumer choice towards gas-powered appliances and increases the cost of achieving a high level of electrification. Leveraging the expansion of inter-city transmission pipelines in China as a quasi-experiment, I show that the increased accessibility of natural gas via infrastructure expansion significantly raises the market share and sales quantity of gas water heaters. To quantify the welfare implications for water heating electrification, I estimate a structural model of the water heater market, accounting for the impacts of gas infrastructure on consumer choice. Demand model estimates reveal that the expansion of gas infrastructure raises consumer valuation of gas water heaters relative to electric ones. This implies a higher cost of electrifying water heating when gas infrastructure is expanding, as the goal of electrification is to shift consumers towards electric appliances. Counterfactual simulations suggest that, with a 20% increase in gas infrastructure penetration, the cost of electrification rises from 1.4 to 2.2 billion USD, corresponding to an increase of over 50% relative to the status-quo gas infrastructure scenario. The increased cost of electrification will be weighed against both near-term environmental benefits and other consequences from natural gas expansion. The findings underscore a long-run economic burden of utilizing natural gas as a bridge fuel in the transition towards a net-zero carbon emissions future.

Electricity grids form the backbone of modern economies, but the utilities responsible for maintaining them face new energy management challenges associated with both aging infrastructure and climate change. Growing evidence suggests that digital technologies and data-driven decision-making may improve firm performance. However, existing work focuses on the private sector. Organizations providing public services have different incentives and constraints. In this paper, we narrow this gap through a study of the U.S. power sector. We construct a rich utility-level data set and estimate the effects of “smart” meters on electricity losses, a key indicator of system and utility performance. Implementing an augmented staggered difference-in-differences design, we find that electricity losses decrease by 4-7% following smart meter deployment, on average. Utilities’ annual revenue increases by 1-2%. We show that the underlying mechanisms relate to changes in energy management. Consumption measurement and billing accuracy improve, as indicated by an increase in sales, giving utilities a clearer understanding of the system to enhance decision-making. Utilities invest in complementary organizational capital that is important for fully realizing the benefits of digitalization, such as hiring “quants.” They also offer new products, like demand response programs, which attenuates the increase in sales but does not drive the reduction in losses. Power outage duration declines, suggesting that utilities use smart meters to improve reliability by restoring service faster after disruptions. Outage frequency remains unchanged.

This paper provides causal evidence on a within-conglomerate channel of carbon leakage under China’s regional pilots of the Emission Trading System (ETS). Our analysis leverages firm-level tax records linked to detailed ownership networks and exploits the quasi-experimental nature of the ETS rollout. We find that regulated firms reallocate production and emissions to unregulated sister entities within the same ownership network, leading to a 10.2% increase in carbon emissions among unregulated subsidiaries. This estimate provides a lower bound on total leakage from the ETS pilots, implying that at least 19% of the emissions reductions achieved by regulated firms are offset through within-conglomerate leakage. We further show that leakage is concentrated in pilots regulating total emissions, while we find little evidence of leakage under pilots regulating emission intensity. Leakage effects are also stronger among low-emission firms and in regions with lower regulatory risk. Our results highlight that incomplete regulation can dilute policy effectiveness through leakage within ownership networks, suggesting the importance of accounting for corporate ownership structures when designing and evaluating carbon pricing policies.

This paper examines the enduring effects of early-life exposure to heatwaves on the climate governance of local political leaders. We compile detailed biographical information on city mayors and party secretaries in China and combine it with comprehensive data on carbon emissions, economic outcomes, and policies for over 2800 counties from 2000 to 2017. We find that counties governed by officials who experienced heatwaves in their early life exhibit about a 1% reduction in carbon emissions relative to those governed by officials without such exposure. The effect is driven primarily by mayors, officials with more intense or repeated heatwave exposure, and cities with less industrialized economic structures. Further analysis provides suggestive evidence that these officials are more likely to implement carbon pricing and emission abatement policies, as well as policies with clear targets, enforcement, and mandatory language. Their governance reshapes local economic structures by constraining the activity and entry of emission-intensive manufacturing firms, a pattern further supported by firm-level evidence of lower carbon emissions.

This paper studies the effects of extreme temperatures on labor supply and performance in the heavy-duty trucking industry, a pivotal sector with broad productivity spillovers and significant road safety externalities. Using rich and high-frequency data on individual truck drivers in China, we find that exposure to extreme heat significantly reduces labor supply and increases the incidence of risky driving. Evidence further suggests that extreme temperatures disrupt off-duty rest and increase on-duty fatigue among drivers. We also document behavioral adaptation: drivers respond to heat by adjusting work schedules and reallocating labor to adjacent days. Furthermore, the estimated temperature effects on labor supply and risky driving are smaller among drivers employed by firms that offer heat subsidies.

Climate-driven shifts in fish stocks, featuring many species across management boundaries, challenge fisheries sustainability. We examine the risk of regional stock extinction due to loss-driven overharvest in the face of climate change. We find critical thresholds for stock levels that, if crossed, can lead to depletion of fish resources within exclusive economic zones. We explore the sensitivity of the threshold to both biological and economic factors, emphasizing the overfishing incentives induced by climate-driven stock shifts. We further investigate the role of direct financial transfer (side payments) as a potential strategy to support conservation efforts under climate change. Loss-induced overfishing poses a substantial threat to global fisheries, especially in the tropical regions. Our findings underline the urgent need for adaptive management strategies to mitigate these risks.

We study the effects of a technical intervention in Karachi, Pakistan – converting bare distribution wires to aerial bundled cables (ABCs) – that was intended to prevent illegal grid connections and improve utility cost recovery. Theft-resistant cables reduced losses. This occurred primarily through decreases in unbilled consumption, with the number of formal utility customers and their billed consumption both increasing. Load shedding outages decreased. In areas with these cables installed, consumers have more appliances and higher electricity-related expenditures. Revenue recovery rose, but consumers’ billing-related complaints also increased.

Firms in developing countries often identify electricity as a major constraint to operations. Decentralized renewable energy sources, which are often promoted as a tool to achieve sustainable development, could help alleviate these constraints by providing “clean” electricity to locations that are difficult to reach with the centralized electric grid. We investigate whether electrification in Nepal – via microhydro plants and their mini-grids – helped grow the manufacturing sector and thereby induce structural transformation. Mini-grids led to a small but statistically significant increase in manufacturing establishments. Following electrification, females and males were more likely to be employees and less likely to be self-employed. Likewise, usual employment activities shifted from labor in agriculture to salary and wage work. In locations with smaller generation capacities, the impacts of mini-grids on labor-related outcomes were smaller. There is suggestive evidence of larger impacts in locations with better market access.

Reliable electricity access is vital to economic growth, though financial challenges can undermine service quality. In Karachi, Pakistan, the local utility intervened to reduce losses and improve bill revenue recovery. The intervention increased budgets to improve infrastructure, provided staff incentives, and expanded customer engagement activities. We employ qualitative techniques to study managers’ and customers’ perceptions of the intervention and the mechanisms driving its effects. While managers credit the multi-pronged nature of the intervention for increasing trust and mitigating the effects of the COVID-19 pandemic, customers report no increase in trust and focus primarily on infrastructure improvements.

We study the effect of information provision on defensive expenditures, using China’s roll-out of air pollution information as a quasi-natural experiment. With a unique dataset of high-frequency mask purchase transactions, our difference-in-differences estimates show that the provision of air pollution information increases expenditures on PM$_{2.5}$ respirators by 32%, which is mainly driven by improved information quality and the addition of PM$_{2.5}$ index. The effect is enhanced by increased attention to pollution alerts and it is more pronounced during heavily polluted days. Our results shed light on the benefits of information provision through inducing defensive expenditures to reduce air pollution exposure.

Hundreds of millions of households depend on electricity grid connections providing low quality and unreliable services. Understanding the impacts of and consumer response to electricity quality improvements is important for development and the environment. We investigate this in the Kyrgyz Republic through randomized improvements in the grid, which can improve electricity service quality. Treated households experience significantly fewer voltage fluctuations per day, an indicator of improved electricity quality post-intervention. Treated households’ billed consumption of electricity services increased during peak months post-intervention, with increases in consumption of 4% and 18% for homeowners and renters, respectively. Consistent with this, treated households, particularly renters, significantly increased ownership of electric heaters. Treated households invested more in energy efficiency, potentially mitigating their electricity bill increases post-intervention.

Geographical distance constitutes friction of searching research collaborators. Taking advantage of a quasi‐natural experiment featured by High‐Speed Railway (HSR) lines in China, this paper employs the difference‐in‐differences model to identify the causal impact of a substantial improvement in the intercity transportation infrastructure on collaborative innovation across cities. The data pertain to a universe of patent applications filed by Chinese universities and their citations. We find that HSR contributes to a substantial increase in the innovation quantity and quality of collaborative patenting innovation between universities and corporates. It contributes to industry collaboration by utilizing university academic disciplines in the related technology fields. Lastly, HSR facilitates universities to search for new research partners with better quality beyond the geographical boundary.

Under the Kyoto Protocol, the Clean Development Mechanism (CDM) expects to facilitate the North-South knowledge spillovers for climate-friendly technologies. This paper examines the effect of this voluntary international climate cooperation on firm innovation and knowledge spillovers through the lens of CDM projects in China. Using a matched Difference-in-Differences (DID) approach, we find that CDM projects contribute to firms’ innovation quantity, quality, and direction in renewable energy and energy efficiency technologies. These effects are more pronounced in inducing wind, hydro, and solar energy. We explore the role of foreign sponsors in knowledge spillovers. Sponsoring firms play the technology supplier role by raising the innovation quantity and quality, while sponsoring governments perform the information intermediary role by facilitating citation flows.

Labor productivity, human capital formation, and income growth decline amid hot ambient temperatures. The implications of such temperature sensitivity for climate change damages depend upon the capacity for human adaptation to persistent temperature changes—as opposed to idiosyncratic temperature variation. Studying millions of collegiate track and field performances from 2005 to 2019, this paper shows that performance diminution in hot ambient conditions is mitigated by heat adaptation, a physiological response to heat stress and associated physical and cognitive impairments. Across varied specifications of the temperature-performance relationship, adaptation reduces performance losses from alternative climate change scenarios by more than 50%.

This paper gives an overview of the performance of China’s seven regional carbon market pilots and the range of approaches they have used. We assessed the outcomes of these pilots using publicly available secondary market trading data. The differences in market performance are explained by the design of key market elements such as emission allowances, covered sectors, allowance allocation, monitoring, reporting and verification, compliance and penalties, and offset market. The lessons learned from the regional carbon market pilots are used to provide insights that can aid in the design of the upcoming national carbon market.

TBD

Climate change is increasingly destabilizing rural credit markets by raising default risks for agricultural loans. Extreme weather events – such as heatwaves and heavy rainfall – can significantly reduce farm yields, jeopardizing loan repayment. However, rural banks often overlook climate risks or lack structured approaches to integrate these risks into loan management. This project evaluates information-based interventions to improve risk management by enhancing climate resilience in both agricultural production and rural credit. The researchers are piloting a randomized evaluation with farmers and loan officers in China, testing interventions that address two key challenges: (i) climate risk awareness, providing loan officers and farmers with targeted information on climate risks, forecasts of extreme weather events, resilient farming practices, and agricultural insurance options; and (ii) loan officer accountability, encouraging more systematic follow-ups with farmers post-loan issuance to ensure risk mitigation strategies are implemented. These interventions are delivered through training sessions, digital tools, and structured reporting mechanisms to improve decision-making and risk management. This study will provide practical insights for policymakers and financial institutions on integrating climate risk considerations into rural lending practices. The findings will enhance understanding of how information asymmetries, risk perception, and institutional accountability influence credit market resilience under climate change. Additionally, this study will inform scalable policy solutions that can be adapted to other developing economies with climate-exposed agricultural sectors.

Increased access to affordable and high-quality electricity services is needed in many low- and middle-income countries. Raising revenue through electrical bill payments can be key to supporting this goal, and help electricity utilities meet increasing electricity demand, while limiting non-technical losses. However, non-payment can result in fewer investments in infrastructure and upgrades, which in turn perpetuates poor service for households. Further, when electricity generation is dominated by fossil fuels, as in Pakistan, greater consumption of electricity services translates into higher carbon emissions. Thus, losses exacerbate the sector’s financial problems and its contributions to climate change. Utilities employ various approaches—technological and institutional innovations—to increase payment for electricity services consumed, yet often it remains low. The research team’s prior work in Karachi, Pakistan indicates that this social norm of not paying for electricity is linked to mistrust in billing practices, information failures, and financial constraints. This suggests a role for complementary interventions to shift norms. In partnership with Karachi Electric, researchers propose a randomized evaluation to test transparency, information, and financial interventions designed to decrease the wedge between consumption and generation. Randomizing interventions at the transformer level will allow the researcher team to estimate tons of CO2 abated.

In many settings, electricity is subsidized, particularly with subsidies aimed at ensuring the poorest households have access to some low quantity of electricity services. How to deliver such subsidies cost-effectively, particularly in contexts in which utilities also struggle with electricity theft and bill non-payment, is an open question. This proposed project will evaluate a government initiative in Punjab, Pakistan to expand energy access among low-income households that are already grid-connected. Under the “Chief Minister (CM) Punjab Free Solar Panel” scheme, the Punjab Power Development Company Ltd, will provide free rooftop solar panels to 100,000 households that have historically consumed less than 200 kWh of electricity per month. Consumption at or under 200 kWh is low, covering basic needs, and therefore is the current cutoff for the lifeline electricity tariff. This initiative is set against a backdrop of acute energy shortages in Pakistan, soaring grid electricity prices, and the rapid decline in solar photovoltaic costs, which together have catalyzed a broader transition to renewable energy in Pakistan.

Trees provide large positive externalities within neighborhoods, including noise attenuation, heat alleviation, and air pollutants removal. However, there are remarkable inequalities in tree cover across communities in the US. The wealthier and whiter neighborhoods enjoy more greenery. The disparities in tree exposure can lead to inequalities in heat exposure and health risks. In this paper, we characterize the unequal distribution of trees across neighborhoods in the US and investigate the consequences. We provide evidence that this tree inequality can be attributed to racial discrimination. First, we show that the disparity in tree over today can be traced back to a historic racially discriminatory housing policy. Second, through an audit experiment, we demonstrate that people of color are steered away from places with high tree cover in the initial stage of housing search.