Ricardo Peña

We study how firms respond to transition risk from anticipated U.S. conservation policy. We link polluting establishments to measures of unprotected endangered habitats and document differential responses across multi-plant and single-plant firms. High-exposure facilities of multi-plant firms reduce emissions and production, with firms reallocating activity to lower-exposure facilities. High-exposure single-plant firms substantially increase emissions and production, and scale back mitigation, consistent with a stranded-asset mechanism. These responses have ecological consequences: vegetation and avian biodiversity decline near exposed single-plant facilities, while reductions by multi-plant firms are insufficient to generate detectable improvements. This asymmetry highlights the unintended effects of transition risk.

We study fossil-fuel producers' responses to transition risk from anticipated U.S. environmental policy. Exploiting spatial variation in exposure to prospective conservation restrictions, we find that oil and gas production increases at more exposed wells following the policy announcement. The response is concentrated among financially unconstrained firms and is strongest at newer wells with greater remaining productive capacity. Biodiversity also deteriorates around exposed wells operated by unconstrained firms, with no comparable decline around constrained firms. Our findings show that financial capacity determines whether firms can act on green-paradox incentives and whether anticipated regulation generates unintended environmental consequences.