First, we producecausal estimates of the elasticities between biodiversity outcomes and air pollution. We use aresearch design that isolates variation in local pollution driven by transported pollution fromdistant, upwind cities (e.g., Deryugina et al., 2019; Anderson, 2020). We show that “upwindpollution” coming from areas over 300 km away generates substantial variation in local airquality, and these imported pollution shocks cause reductions in local biodiversity outcomes.Second, we estimate the impact of the military spending shocks on air pollution, and multiplythese estimates by the biodiversity-pollution elasticities we obtain from step one. Together,these exercises give us the expected impact of the military shocks on biodiversity throughair pollution. We find that pollution accounts for 20-60 percent of the reduced form effect ofmilitary shocks, suggesting air pollution is a first-order pathway underlying the production-biodiversity link
have they successfully shown this 'mediation' channel ... with 2 separate sources of exogenous variation? (That's always very challenging to identify)