As a kid growing up in North Carolina, Prakash Mishra was very interested in planets. "My parents got me a telescope when I turned 6 or 7, and that was my personality for probably 10 years," he says, noting that he thought he would eventually study physics or astrophysics.
But a series of what he calls "happy accidents" led him down a different path. He went to the University of Pennsylvania to study biochemical engineering but ended up earning a bachelor's degree in economics in 2019. Six years later, he completed a doctorate, also at Penn, in applied economics. Now, after a year at Dartmouth College as a Globalization Post-Doctoral Fellow, Mishra has joined Caltech as an assistant professor of economics.
His research focuses on how to preserve environmental services provided by nature, such as carbon sequestration and water filtration, without undercutting economic development, using global- or continent-scale data to inform empirical answers to hard policy tradeoffs. For example, in a recent paper published in The Review of Economic Studies, Mishra explored protected land—including wilderness areas but also working farmlands, managed forests, and cultural landscapes—over four decades in the European Union and analyzed the causal effect of protection on vegetation cover and nightlights. Mishra and his coauthors surprisingly found no meaningful impacts on either outcome.
But the takeaway of this work was not to stop protecting land, Mishra says. Instead, he and his coauthors argue that the incentives for land protection in the EU were poorly designed.
"The EU Commission would set area-based targets to protect land, but it was local governments who chose how to site protected areas," he says. "Local governments, beholden to their voters, chose to protect land at little risk of development and with protection frameworks that still allowed human use. This work connects to a broader research agenda of mine on designing market incentives that actually serve the dual goals of environmental conservation and economic development."
We recently spoke with Mishra about his path to environmental economics, the projects that currently excite him, and what he's looking forward to at Caltech.
When did your interest in the environment begin?
In high school, my friend and I decided to enter a North Carolina-wide science fair, but it was not obvious how we would write a paper about astrophysics. We had read news articles about algaculture—specifically, using algae to clean up chimneys on a polluting factory. We thought, "This is amazing! What if you could put this in a car and clean up car exhaust?" We bought a bunch of algae online that survived at really high temperatures, hooked it up to a fan that sat on the back of a car, and tried to show that it could reduce the carbon dioxide in the exhaust. It did not work at all; the algae died. But it was a really fun learning experience that sparked my interest in climate issues.
How did you move into economics?
I went to Penn as a chemical biology major, but a lot of people in that field were getting jobs in pharmaceuticals. That was not super exciting to me. At the end of my first year, I found an internship working for the City of Boston. My main task: figuring out how to optimize the trash trucks so that they would know where to pick up and where trash was likely to be filling up on a given day of the week. It involved interesting prediction problems and ways to use data to make people's lives a lot better. I found that really appealing, and as I was leaving that place, my boss, Lauren, mentioned that her husband was about to move to Penn to be an economics professor. She said if I liked what I was doing, I should go work for him, and that's exactly what I did. If I had not worked in Boston, I don't think I would've been an economist.
I continued grad school at Penn and went in thinking I would be an urban economist. But, in another happy accident, the first question that I started thinking about was an environmental question. I had watched a Netflix documentary about the avocado industry in Mexico. The US used to have, basically, a complete embargo on Mexican avocados but in 1997, almost overnight, that changed. The documentary pitched trade with the US as an environmental catastrophe due to accelerated deforestation and water depletion. There were two pieces missing from that narrative: First, did the people in Michoacan, Mexico, benefit from trade? After all, US avocado prices are higher than Mexican avocado prices. And second, if the US never traded avocados with Mexico, would they be getting avocados more from water-scarce California, or Chile, or even the Peruvian rainforest? I was interested in documenting the trade-off in which people who are otherwise living in poverty get access to a lot of new opportunities, but it comes at a real environmental cost.
That was the question that got me started, and, since then, I've been chasing these types of questions, where on the one hand you have the environment, and on the other you have some form of economic or sustainable development. How do you balance those two things with policy?
What types of problems does environmental economics try to solve?
One of the projects that I'm really excited about is carbon offset markets, which economists have found attractive for a long time. We emit carbon dioxide into the atmosphere, and when anyone can emit carbon, and carbon affects everyone, no one bears enough of the responsibility. Carbon offset markets give people an incentive to do something about it. You could make everyone stop emitting carbon—for example, make everyone buy an electric car. But some vehicles, like trucks, are still really expensive to make less carbon intensive. Instead of paying for these large costs up front, maybe there are some carbon reduction opportunities in the world which have a lower cost but need financing to get off the ground. In theory, a carbon offset is a way to make these trades.
For example, let's say I have a factory, and one of my options for carbon offsetting is to install an algaculture scrubber, which could be really expensive. Or I could just finance a project abroad that plants trees in a place that was deforested 10 years ago and, consequently, traps carbon that would've gone into the atmosphere. In both of those scenarios, we remove some carbon from the atmosphere, but in the second option, you can get those carbon gains at a lower cost. And this is super important, especially in political climates right now where there's just not a lot of money for environmental causes. You need to be thinking about cost minimization as a piece of how you think about the environment. Our work on carbon offsets has looked at whether they can actually work in real life. Spoiler: Despite their theoretical appeal, carbon offset markets face a lot of practical problems!
What brought you to Caltech?
I was looking for a place where the blend of methods I use, which are somewhat interdisciplinary, would be at home. A lot of what I do involves data science with satellite or environmental data, and very classic economic machinery and techniques and models. Many places appreciate the economic side, but I wanted one that would also appreciate the scientific side and maybe even teach me about it. Along the way, I met Hannah [Druckenmiller; Caltech assistant professor of economics and a William H. Hurt Scholar], and she told me about all the resources here. I mean, there's JPL just up the street [Caltech manages JPL for NASA]. So, there were a lot of reasons for me to think that this would be a place where I could learn a lot about the things that I see as my own blind spots.
Can you tell us about other future projects you have in mind?
We are hoping to work with Caltech's Linde Center for Science, Society, and Policy on a project about the role of the Clean Water Act in cleaning up the nation's water supply. Hannah and other coauthors have done a lot of work showing how the Clean Water Act has played a major role in wetland conservation, but there's still no large-scale evidence of its impacts on water quality.
I've also started some work exploring the role of property rights in Amazonian deforestation. Much prior work, including my own, has been focused on how markets for the services provided by forests can improve the environment–development tradeoff. A lesser-known fact about the Brazilian constitution is that it enshrines land reform as a right. If a farmers' land in the Amazon has too much forest, it could be deemed as not meeting its social function, meaning a squatter could theoretically gain the right to expropriate your land. This is a hugely political issue in Brazil. We are interested in how to design this institution to reduce its environmental costs and have been combing through judicial documents and satellite imagery to study how this process allocates land to squatters.
What do you like to do in your free time?
I'm a triathlete, so running, cycling, and swimming takes up lot of my time. I was in Hanover, New Hampshire, for a year before this, so I am just getting back to a lot of outdoorsy things, because that's a very cold place. I was not used to cycling on the ice.
Prakash Mishra, assistant professor of economics
