Diagnosing Spatial Policies in a Changing Commons
Presented by:
Karl Aspelund
Yale University
Friday, October 30, 2026
12:00 pm-1:15 pm
Taylor-Hibbard Seminar Room (Rm103)
We study spatial environmental regulation under uncertainty, and in particular how ecological and economic shocks change what leakage costs. Leakage of activity occurs whenever profits are not separable across space, whether because of fixed factors, constraints the regulator imposes, or price changes. In a model of firms choosing activity across areas that share an environmental benefit, the marginal welfare cost of leakage depends on three things: where displaced activity goes, the gap between the private and social value of conservation there, and how the two move together under shocks. When shocks are independent across places, substitution lets activity move to wherever conditions are good, so leakage can act as a hedge. We take the model to spatial closures in the U.S. Northeast scallop fishery. Matching trip-level harvest locations to biomass surveys, we recover the marginal cost and benefit of conservation at each ground from a structural model of location choice and size-structured biology. The regulation is too lax, and the marginal value of conservation is dominated by the precautionary value of insuring against biomass collapse. At the same time, the shared days-at-sea budget drives substitution that offsets 17% of the closures’ conservation value. We then ask how warming oceans have changed these results. Greater variability raises the precautionary value of conservation and calls for tighter limits. Shocks have also become more correlated across space, so displaced activity now lands on grounds just as stressed as the ones it left, and leakage no longer hedges. Much of the regulation’s failure to keep pace can be explained by a regulator still using growth expectations from a decade ago, before substitution stopped hedging and the precautionary value of conservation grew.