Research
Work in Progress
Mines–Rivers–Yields: Downstream Impacts of Mines on Agriculture in Africa with Gustav Pirich, Maximilian Heinze and Nikolas Kuschnig. R&R at the Journal of Development Economics. DOI, Updated WP (pdf)
Abstract
Mining operations in Africa are expanding rapidly, creating negative externalities that remain poorly understood. In this paper, we provide causal evidence for the impact of water pollution from mines on vegetation and agriculture across the continent. We exploit a natural experiment, where mines cause a discontinuity in water pollution along river networks, comparing vegetation health in upstream and downstream locations. We find that mines significantly reduce peak vegetation indices downstream by 1.3-1.5%, and impair the productivity of over 74,000 km2 of croplands. Impacts may reach farther downstream, and are particularly strong in fertile regions and areas where gold mining predominates. Our findings highlight substantial externalities of mining and an urgent need for enhanced regulation and oversight to mitigate and monitor them.
Man Eats Forest: Impacts of Cattle Ranching on Amazon Deforestation with Nikolas Kuschnig. Slides (pdf), WP coming soon
Abstract
Vast areas of the Brazilian Amazon are converted to pasture, threatening the global climate and the country's agricultural productivity. Yet, the deforestation impact of cattle production itself remains contested, as cattle and pasture serve as the main intermediary for land appropriation. In this paper, we quantify the impact of the expanding cattle herds on deforestation, exploiting information on pre-existing production patterns and international consumption changes for causal identification. We show that the expansion of cattle herds is a major and immediate driver of deforestation. This effect far exceeds deforestation for speculative land appropriation that is not related to beef production. We do find that intensification and improved land tenure could help decrease land pressure marginally, but they cannot offset the land use requirements of beef production. Our findings highlight an urgent need to evaluate the policy implications of beef production and consumption to address their deforestation impacts.
Mapping Mining Areas in the Tropics from 2016–2024 with Philipp Sepin and Nikolas Kuschnig. R&R at Nature Sustainability. WP (pdf)
Abstract
Mining provides crucial materials for the global economy and the climate transition, but can have severe environmental and social impacts. Current analyses of these impacts are limited by a lack of data on mining activity, particularly in the regions most affected. In this paper, we present a novel panel dataset mapping mining sites along the tropical belt from 2016 to 2024. Our approach uses a machine learning model, trained on over 25,000 mining polygons from the literature, to automatically segment mining areas in high-resolution (<5 m) satellite imagery. The dataset maps over 145,000 mining polygons covering an average area of 65,000 km2 annually, with an accuracy of 87.7% and precision of 84.1%. Our approach allows for accurate, precise, and consistent delineation, and can be scaled to new locations and periods. The dataset enables detailed analyses of local environmental, social, and economic impacts of mining in regions where conventional data is scarce or incomplete.
The Saturated Bayesian: A Probabilistic Break Detection Framework with Lucas D Konrad and Jesús Crespo Cuaresma, WP coming soon
Abstract
Effectively tackling contemporary challenges posed by climate change and the continued degradation of natural habitats requires swift and decisive actions. Identifying the most effective policies (or a mix thereof) is crucial to inform policy-makers that are often constrained in their choice set. Traditional methods for policy evaluation rely on precise knowledge about the occurrence and timing of interventions. Structural break identification on the other hand has a long tradition in the field of econometrics. Recent approaches cast the search for such breaks in the form of indicator-saturated regressions, identifying step-shifts in relevant time series, but lack a proper framework of uncertainty quantification. We introduce a coherent probabilistic framework for the detection of structural breaks with unknown timing in panel data. The proposed Bayesian setup naturally incorporates the quantification of break uncertainty with little overhead. Simulation studies demonstrate that our approach is competitive to existing approaches in detecting true positives and drastically reduces false positives. We apply our method to replicate studies on the effectiveness of climate policies in the European transport sector and provide novel insights in the dynamics of deforestation in the tropics.
The heterogeneous effects of macroprudential policies in Central, Eastern, and Southeastern Europe (master thesis), R&R at Economic Modelling. WP (pdf)
Abstract
The effects of macroprudential policies are of paramount interest to policy-makers that seek to maintain financial stability. Structural characteristics of countries likely mediate these effects and potentially drive heterogeneities in them. We study the dynamic responses to macroprudential shocks for countries in Central, Eastern, and Southeastern Europe, which were exposed to pronounced macrofinancial boom-bust cycles and adopted such measures comparatively early. We find that a macroprudential tightening curbs credit growth and reduces capital inflows but responses differ considerably across countries, especially for cross-border capital flows. Structural characteristics such as the exchange rate regime, the level of financial development, or the external openness of countries play key roles in shaping the effects of macroprudential policies. These mediating factors should be considered by policy-makers aiming to preserve financial stability, together with the appropriate choice from the set of prudential regulations at their disposal.
Journal Publications
A unified modelling framework for projecting sectoral greenhouse gas emissions. Vashold, L., and Crespo Cuaresma, J. (2024). Communications Earth & Environment, 5(139). DOI
Abstract
Effectively tackling climate change requires sound knowledge about greenhouse gas emissions and their sources. Currently, there is a lack of comprehensive, sectorally disaggregated, yet comparable projections for greenhouse gas emissions. Here, we project sectoral emissions until 2050 under a business-as-usual scenario for a global sample of countries and five main sectors, using a unified framework and Bayesian methods. We show that, without concerted policy efforts, global emissions increase strongly, and highlight a number of important differences across countries and sectors. Increases in emerging economies are driven by strong output and population growth, with emissions related to the energy sector accounting for most of the projected change. Advanced economies are expected to reduce emissions over the coming decades, although transport emissions often still show upward trends. We compare our results to emission projections published by selected national authorities as well as results from Integrated Assessment Models and highlight some important discrepancies.
Eroding Resilience of Deforestation Interventions — Evidence from Brazil’s Lost Decade. Kuschnig, N., Vashold, L., Soterroni, A., and Obersteiner, M. (2023). Environmental Research Letters, 18(7):074039. DOI
Abstract
Brazil once set the example for curtailing deforestation with command and control policies, but, in the last decade, these interventions have gone astray. Environmental research and policy today are largely informed by the earlier successes of deforestation interventions, but not their recent failures. Here, we investigate the resilience of deforestation interventions. We discuss how the recent trend reversal in Brazil came to be, and what its implications for the design of future policies are. We use newly compiled information on environmental fines in an econometric model to show that the enforcement of environmental policy has become ineffective in recent years. Our results add empirical evidence to earlier studies documenting the erosion of the institutions responsible for forest protection, and highlight the considerable deforestation impacts of this erosion. Future efforts for sustainable forest protection should be aimed at strengthening institutions, spreading responsibilities, and redistributing the common value of forests via incentive-based systems.
BVAR: Bayesian vector autoregressions with hierarchical prior selection in R. Kuschnig, N., and Vashold, L. (2021). Journal of Statistical Software, 100(14). DOI, R package
Abstract
Vector autoregression (VAR) models are widely used for multivariate time series analysis in macroeconomics, finance, and related fields. Bayesian methods are often employed to deal with their dense parameterization, imposing structure on model coefficients via prior information. The optimal choice of the degree of informativeness implied by these priors is subject of much debate and can be approached via hierarchical modeling. This paper introduces BVAR, an R package dedicated to the estimation of Bayesian VAR models with hierarchical prior selection. It implements functionalities and options that permit addressing a wide range of research problems, while retaining an easy-to-use and transparent interface. Features include structural analysis of impulse responses, forecasts, the most commonly used conjugate priors, as well as a framework for defining custom dummy-observation priors. BVAR makes Bayesian VAR models user-friendly and provides an accessible reference implementation.
The impact of macroprudential policies on capital flows in CESEE. Eller, M., Hauzenberger, N., Huber, F., Schuberth, H., and Vashold, L. (2021). Journal of International Money and Finance, 119:102495. DOI, WP (pdf)
Abstract
In line with recent policy discussions on the use of macroprudential policies (MPPs) to respond to cross-border risks arising from capital flows, this paper tries to quantify which impact MPPs had on capital flows in Central, Eastern and Southeastern Europe (CESEE). This region experienced a substantial boom-bust cycle in capital flows amid the global financial crisis and policymakers had been quite active in adopting MPPs already before that crisis. To study the dynamic responses of capital flows to a tightening in the macroprudential environment, we propose a novel regime-switching factor-augmented vector autoregressive (FAVAR) model and include an intensity-adjusted macroprudential policy index to identify MPP shocks. Our results suggest that tighter MPPs translate into negative dynamic reactions of domestic private sector credit growth and gross capital inflow volumes in a majority of the countries analyzed. Level and volatility responses of capital inflows are often correlated positively, suggesting that if MPPs were successful in reducing capital inflows, they would also contribute to lower capital flow volatility. We also provide evidence that the effects of MPP tightening are in most cases stronger in an environment characterized by low interest rates, suggesting that MPPs would be more effective if conventional monetary policy were facing constraints.
Other Publications
The Economic Impacts of Malaria: Past, Present, Future. Kuschnig, N. and Vashold, L. (2023). In: Planetary Health Approaches to Understand and Control Vector-borne Diseases, Wageningen Academic. DOI, WP (pdf)
Blue Skies, Blue Seas: Air pollution, marine plastics, and coastal erosion in the Middle East and North Africa. Heger, M., Vashold, L., Palacios, A., Alahmadi, M., Bromhead, M.A., Acerbi, M. (2022). MENA Development Report, The World Bank Group. DOI
CESEE’s macroprudential policy response in the wake of the COVID-19 crisis. Eller, M., Martin, R., and Vashold, L. (2021). Focus on European Economic Integration, Oesterreichische Nationalbank. Paper (pdf)
Macroprudential policies in CESEE - an intensity-adjusted approach. Eller, M., Martin, R., Schuberth, H., and Vashold, L. (2020). Focus on European Economic Integration, Oesterreichische Nationalbank. Paper (pdf)
Did macroprudential policies play a role in stabilizing the credit and capital flow cycle in CESEE? Eller, M. and Schuberth, H. (2020). In: 30 Years of Transition in Europe, Edward Elgar. DOI