Labor Market Impacts of Deforestation Caused by Invasive Species Spread

Abstract

Loss of tree cover caused by forest-attacking invasive species negatively affects environmental quality by impacting air quality, temperature, and recreational opportunities. Prior work has shown causal associations between these environmental quality metrics and labor market outcomes, however, never before due to invasive species spread. To address this gap, this paper explores the labor market effects of invasive species-induced deforestation using quasi-random detections of the invasive emerald ash borer (EAB) as a natural experiment. Using multiple sources of labor market data, it is shown that wage earnings are lower by an average of 1% in the years after EAB detection. Strongest impacts are observed in the manufacturing (4.3% decline) and accommodation and food service (4.2% decline) industries. Additional impacts are observed on the number of Social Security claimants and the number of people employed at firms in EAB counties. Lost labor market earnings due to EAB total $11.8 billion, or, $1.2 billion/year over the 10-year period investigated. Many robustness and falsification tests are performed.