Allan Hsiao

I work on questions in environmental and development economics using tools from empirical industrial organization and international trade. [ CV ]

Working papers

The Global Effects of Carbon Border Adjustment Mechanisms (with Kimberly Clausing, Jonathan Colmer, and Catherine Wolfram)

[ | paper ]

We study carbon border adjustment mechanism (CBAM) policies, as currently being implemented by the EU and UK. Policy discussions have cited three motivations and one concern. CBAMs can improve domestic competitiveness in regulated markets, reduce emissions leakage to unregulated markets, and encourage other countries to tax carbon. But CBAMs may particularly disadvantage lower-income trading partners. We evaluate these forces with a quantitative equilibrium model and plant-level data on aluminum and steel production worldwide. Our data cover the most emissions-intensive and heavily traded sectors targeted in the first phase of EU and UK implementation. We find that CBAMs can effectively boost competitiveness, curb leakage, and encourage regulation, while also avoiding disproportionate impacts on lower-income countries.

Sea Level Rise and Urban Adaptation in Jakarta

[ | paper | podcast ]

Sea level rise poses an existential threat to Jakarta, which faces frequent and worsening flooding. The government has responded with a proposed sea wall. In this setting, I study how government intervention complicates long-run adaptation by creating coastal moral hazard. I quantify this force with a dynamic spatial model of urban development and flooding. I show that moral hazard generates coastal lock-in by delaying inland migration, and I evaluate policies for reducing this friction.

Food Policy in a Warming World (with Jacob Moscona and Karthik Sastry)

Revise and resubmit, Econometrica

[ | paper | podcast | summary ]

This paper studies the interaction between climate change and agricultural policy. We construct a new global dataset of agricultural policy, trade, production, and extreme heat exposure by country and crop from 1980 to 2011. We find that extreme heat shocks to domestic production lead to consumer assistance, particularly in election years when politicians may prioritize redistribution over revenue. Extreme heat shocks to import partners lead to producer assistance, implying that foreign policy responses may partially offset, rather than amplify, domestic policy responses. Endogenizing trade policy increases end-of-century climate damages by 14%.

Coordination and Commitment in International Climate Action: Evidence from Palm Oil

Revise and resubmit, Econometrica

[ | paper | video | summary ]

Weak environmental regulation has global consequences. When domestic regulation fails, the international community can target emitters with trade policy. I develop a dynamic empirical framework for evaluating trade policy as a substitute for domestic regulation, and I apply the framework to the market for palm oil, a major driver of deforestation and global CO₂ emissions. Relative to business as usual, a domestic production tax of 50% reduces CO₂ emissions by 7.4 Gt from 1988 to 2016, amounting to 0.26 Gt annually. Coordinated, committed import tariffs of similar magnitude reduce emissions by 5.4 Gt over the same period. The cost of these import tariffs is only $15 per ton of CO₂, even accounting for compensating transfers that recognize welfare losses for producing countries. Without coordination and commitment, import tariffs have more limited effects. Alternative policies include domestic export taxes, which are fiscally appealing independent of emission concerns, and a carbon border adjustment mechanism, which encourages domestic regulation.

Climate Crisis and Policy Inaction in Indonesia (with Nicholas Kuipers)

Conditionally accepted, American Journal of Political Science

[ | paper ]

We surveyed voters and politicians in advance of the 2024 Indonesian election to measure preferences for environmental policy. We find that politicians underestimate voter concerns. We conducted an informational experiment with politicians to correct these misperceptions, and we document evidence of learning but no greater support for policy action. We explore three explanations for why voter preferences do not translate into policy. First, politicians only consider acting when their initial misperceptions are particularly large. Second, elite capture prevents politicians from implementing environmental protection. Third, voters prioritize progress in other domains. Our results underscore the multiplicity of challenges facing climate action.

Educational Investment in Spatial Equilibrium: Evidence from Indonesia

[ | paper ]

This paper argues that mobility across space greatly amplifies the returns to education. Students in isolated rural labor markets have limited job opportunities and thus limited wage gains from additional years of schooling. Access to urban labor markets provides more job opportunities and thus larger gains. I capture this mechanism with a spatial equilibrium model in which students invest in education, then migrate for employment after graduation. I estimate the model with quasi-experimental variation from Indonesia's Sekolah Dasar Inpres program, one of the largest school construction programs in history. I find that mobility accounts for roughly half of the aggregate gains from the program. Improving mobility would increase these gains, but also widen regional inequality.

Democratization and Infrastructure Investment: Evidence from Healthcare in Indonesia

[ | paper | podcast ]

Does electoral accountability discipline public spending? After the fall of Suharto, Indonesia held local elections for the first time in decades. I use a dynamic discrete choice framework to study how democratization affected the spatial allocation of public investment in healthcare infrastructure. On one hand, democratization limits distortions from Suharto-era biases toward certain areas, such as those within the patronage network. On the other hand, spillover effects are less internalized as districts become more focused on their own constituents. The first effect dominates, and democratization decreases misallocation overall.

Papers

Sea Level Rise and Urban Infrastructure

Prepared for AEA Papers and Proceedings 2025

[ | paper | code ]

How exposed are cities to the threat of sea level rise? I quantify this exposure worldwide with a focus on urban infrastructure. I document three facts. First, Asian cities are highly exposed. Second, poorer cities and neighborhoods are less exposed. Third, exposure accelerates as sea level rise passes 1.5 meters.

Sea Level Rise and Urban Inequality

AEA Papers and Proceedings 2024

[ | paper | code ]

Sea level rise threatens coastal cities around the world. Will it exacerbate inequality in these already unequal places? The rich may adapt by moving to higher ground, bidding up prices and pushing the poor elsewhere. I study the distributional consequences of this spatial sorting with a simple quantitative model and granular data from Jakarta, a flood-prone megacity of 32 million. I find that sea level rise will double inequality in flood exposure.

Data

Sea Level Rise and Urban Infrastructure Data Set (SUDS)

[ | data | code | readme ]

I measure the exposure of urban infrastructure to sea level rise of up to 5 meters. These data have global coverage and include 11,422 urban clusters with a total population of 3.7 billion.

Historical Urban Development in Jakarta (1887-1945)

[ | data | readme ]

I digitize Dutch colonial maps of Jakarta to measure the evolution of built-up land from 1887 to 1945.

Surveys

Coastal Investment in the Age of Climate Change

Nature Climate Change 2025

[ | paper ]

I discuss the findings of Balboni (AER 2025) and their implications for coastal investment worldwide.

Sea Level Rise (with Clare Balboni)

[ | slides | podcast ]

Sea level rise threatens one billion people by 2050. We survey the literature on coastal damages, adaptation, and policy.

Tropical Deforestation (with Robin Burgess)

[ | slides ]

Tropical deforestation is a major driver of global emissions. We survey the literature and discuss next steps for researchers and policymakers.

Social Safety Nets in Africa (with Colin Andrews and Laura Ralston)

[ | paper | report ]

We take stock of the evidence on social safety net programs in Sub-Saharan Africa, and we discuss implications for equity, resilience, and opportunity.