Recently, Lecturer Zhang Yu from the Department of Resource and Environmental Economics, School of Economics, Shanghai University of Finance and Economics, has had her co-authored paper Securing power, compromising climate: Evidence from drought shocks in China officially published in Journal of Development Economics, a top-tier international economics journal.
Abstract
This paper examines how natural disasters complicate government efforts to balance energy security with the energy transition in regulated electricity systems. Using random variations in runoff as a natural experiment, we find that droughts lead to a long-term expansion of coal-fired power capacity. This expansion is reflected in extensive-margin adjustments, particularly through the commissioning of new coal-fired power plants. We also show that, under administrative regulation of electricity trading and generation, this investment response is driven primarily by government efforts to strengthen power supply stability rather than by firms’ profit-seeking incentives alone. Our findings highlight how adaptive responses to climate-related supply shocks can generate long-lasting fossil-fuel legacies in developing countries where electricity markets are not yet fully developed.
Zhang Yu received her Ph.D. in Economics from Tsinghua University and is currently a lecturer at the School of Economics, Shanghai University of Finance and Economics. Her main research fields are energy and environmental economics and applied microeconomics. Her research papers have appeared in journals including Journal of Development Economics and Journal of Comparative Economics.
