Economic activity and biodiversity in the United States

The environmental impacts of economic activities extend beyond those directly affecting humans. This paper provides new evidence on the link between economic activity and ecosystem decline using a novel dataset that compiles longitudinal ecological sampling information at tens of thousands of locations across the United States between 1960 and 2015. Local shocks in economic activities, such as those driven by national military buildups, led to a significant reduction in species abundance, diversity, and stability, with one-third of the observed effects explained by the causal impact of air pollution. Government environmental regulations significantly mitigated pollution externalities. • We provide the first causal estimates of how economic activity reduces ecosystem biodiversity across taxa, using national military buildup shocks as quasi-exogenous variation. • Our analysis leverages millions of ecological observations from the BioTIME database, which allow us to construct longitudinal measures of species abundance, richness, and stability across the U.S. from 1960 to 2015. • We identify air pollution as a key causal channel, showing it accounts for about a third of the biodiversity impact from economic shocks using an upwind pollution IV strategy. • Environmental regulations such as the Clean Air Act significantly mitigate biodiversity losses, suggesting economic policies that protect human health also confer large ecological co-benefits.