Sieber, Stefanie
(2010)
Economic development and the environment: Three essays.
PhD thesis, London School of Economics and Political Science.
Abstract
The main question that motivates my PhD thesis is how economic activity in developing countries is influenced by and, in turn, affects the environment. Since these interactions can take many forms, I investigate this issue from three different angles, which necessitates both the usage of novel remote-sensing-based datasets and the development of a new theoretical framework. Firstly, the environment can have a direct impact on economic development, the most obvious example being natural disasters like cyclones. As the incidence and intensity of these events will increase with climate change, it is crucial to estimate their short- and long-run costs and the behavioural response of producers to these large and mostly uninsured aggregate shocks. I have, thus, created a new digital database of cyclone exposure for India to estimate how farmers smooth income in the aftermath of these events. The causality can also run the other way, as economic agents disrupt the environment. A case in point is deforestation, which is analysed in the co-authored second chapter of my thesis. In particular, we use satellite data to study how political decentralisation has affected district-level logging rates in Indonesia. Possible mechanisms include local election cycles, the move from monopoly to oligopoly or the need to raise revenue in the absence of other natural resources. Finally, the third chapter assesses to what extent the environment can create preconditions for socioeconomic interaction. More specifically, I analyse how the introduction of heterogeneous space into the standard urban Muth-Mills model generates a residential equilibrium where the formal and informal housing markets coexist. This new setup is then used to evaluate the usual policy prescriptions for slums and demonstrates that new insights can be gained by adding the spatial component. This thesis, therefore, explores possible links between the environment and economic development and illustrates the advantages of using methods and data sources from other disciplines.
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