Working Paper: NBER ID: w31008
Authors: Gabriel Englander; Jihua Zhang; Juan Carlos Villaseñor Debez; Qutu Jiang; Mingzhao Hu; Olivier Deschênes; Christopher Costello
Abstract: Input subsidies in natural resource sectors are widely believed to cause depletion of the natural capital on which those sectors rely. But identification and data challenges have stymied attempts to empirically estimate the causal effect of subsidies on resource extraction. China’s fishing fleet is the world’s largest, and in 2016 the government changed its fuel subsidy policy for distant water vessels to one that increases with predetermined vessel characteristics. The policy features 25 thresholds at which subsidies discontinuously increase. Using a regression discontinuity design, we estimate that a 1% increase in fuel subsidy increases hours of fishing by 2.2%. Reducing Chinese distant water fuel subsidies by 50% could eliminate biological overfishing in several ocean regions.
Keywords: input subsidies; natural capital; fishing; China; regression discontinuity design
JEL Codes: H23; O13; Q22; Q28
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| fuel subsidy (H20) | overfishing outcomes (Q22) |
| fuel subsidy (H20) | fishing hours (Q22) |
| fuel subsidy (H20) | distance traveled by vessels (L92) |