Lab Seminar: Jordan Trinh and Greg Boudreaux

This week, ARE PhD students Jordan Trinh and Greg Boudreaux each presented their ongoing work to the Lab.

Jordan's work examines intertemporal trading in water markets. In California, annual precipitation is characterized by fluctuating extremes, creating large differences in the marginal value of water across time. Groundwater banking is one promising solution by allowing banking partners to engage in intertemporal trade of water. Jordan's work seeks to provide evidence on the gains from intertemporal trade in the context of the California water market, as well as externalities induced by these trades.

Greg's work, joint with Matt Reimer, examines the income elasticity of environmental migration. A large literature assesses the relationship between environmental shocks and out-migration, but this relationship is complicated in resource-dependent areas where shocks simultaneously affect individuals' desire to migrate and their ability to finance migration costs. Past work has shown than outmigration in response to environmental shocks is dampened in low-income countries relative to high-income countries, and has attributed this finding to binding liquidity constraints which prevent the financing of migration costs. However, these findings largely rely on cross-sectional and potentially endogenous comparisons across countries or communities. 

In this work, Greg and Matt use the world' longest-running universal cash transfer to provide the first within-variation test of how liquidity constraints shape adaptive migration responses to environmental shocks. They focus on Alaska, the fastest-warming US state, where rising temperatures are accelerating permafrost thaw and environmental degradation. Alaska is also one of the few places with a codified universal cash transfer, the Permanent Fund Dividend (PFD), which varies exogenously over time. Their empirical approach leverages administrative migration flow data covering 344 Alaska communities from 2000 to 2016, exploiting within-community variation in summer heat exposure and year-over-year variation in PFD amounts. Preliminary results show that summer heat exposure decreases out-migration from rural Alaskan communities, but this effect is negative effect is attenuated by the marginal transfer dollar, consistent with the PFD easing binding liquidity constraints for a subset of constrained movers. Further, this effect appears only for high-cost rural-urban moves and in communities below median per-capita income.