Noémie Pinardon-Touati's ISERP Fellowship: Environmental Consequences of Economic Growth
Noémie Pinardon-Touati’s Fellowship semester was devoted to her research agenda on the environmental consequences of economic growth.
She completed a first version of her paper "Growth, Firm Scale, and the Energy Intensity of Production" (with Kathryn McDonald and Conor Walsh), which centers on a question with large stakes for global climate projections: how much energy will the developing world need as it catches up to rich-country income levels? The paper starts from a striking macro fact—the energy needed to produce a dollar of output falls steadily as economies develop—and traces it to a micro origin: the growth of firms themselves.
Using administrative data on Indian manufacturing plants, the authors show that as individual firms expand, their energy use rises much less than proportionally with output. They document the physics and technology choices behind this "scale effect": larger production units are intrinsically more energy-efficient, and larger firms find it profitable to adopt energy-saving technologies. Embedding these forces in an equilibrium model of firm growth, they find that the expansion of firm scale accounts for nearly all of the large decline in the energy share of Indian manufacturing since 1990. The results imply that growth may be substantially less energy-intensive than extrapolations from today's developing-country technology suggest. The paper is now available as an NBER Working Paper and was presented at the NBER Summer Institute Economic Growth and Long-Run Macroeconomic Development workshop.
The Fellowship also supported a second paper in the same agenda, "The Intrinsic Valuation of Biodiversity Loss" (joint with Adrien Bilal and Conor Walsh). While economic growth has supported large increases in human population and in human quality of life, habitat loss, competition for resources, and pollution have caused dramatic declines in wild animal populations. This paper develops an economic framework for valuing these animal population losses. Specifically, it explores the welfare costs of the loss of animal life in a consequentialist total utilitarian framework that incorporates the intrinsic value of living beings through their sentience. Building on advances in neuroscience, Pinardon-Touati and her co-authors construct a conservative cardinal bound on the sentience of animal species relative to humans. They find that the aggregate sentience losses of animals over the past half-century outstrip the sentience gains to humans from population growth by at least 10,000-fold. Breaking even in welfare terms requires assigning a correspondingly small welfare weight to animals. The draft is available online, and the NBER Working Paper version will be available soon.
Looking ahead, Pinardon-Touati will continue developing this agenda in the coming academic year.