Agricultural & Resource Economics Theses and Dissertations

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    Dynamics of Capital Investment and Pollution Externalities in Wholesale Electricity Markets
    (2022) Holt, Christopher; Linn, Joshua; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
    The field of environmental economics was built on the notion of internalizing into markets the social harm caused by pollution. This dissertation examines the implications of putting that idea into practice in the electric power generation sector, with a particular focus on market structure and short- and long-run industry dynamics. Environmental policy to mitigate climate change seeks to transform the capital composition of industries for the purpose of reducing carbon dioxide emissions. In deregulated wholesale electricity markets, firms may exercise long-run market power through investment and retirement decisions which affect future wholesale price settlement. In Chapter 1, I develop a dynamic structural model of the Texas electricity market spanning 2003-2019 to analyze how long-run market power exercise and environmental policy for reducing carbon emissions affect the capital composition of the industry over time. I find that market power exercise led to significant early fossil fuel plant retirements over this period, with an attendant decrease in consumer surplus on the order of $1.6 billion annually. Further counterfactual analysis suggests that federal production tax credits for wind power expanded the deployment of wind by approximately 73 percent, but the associated reductions in emissions were more than twice as costly as would have been achieved under a $20-per-ton carbon tax. In Chapter 2 I delve further into the issue of market structure and long-run dynamics. Economic theory suggests that setting the wholesale price of electricity at the marginal social cost of unmet demand during periods of scarcity results in optimal capacity investment in the presence of perfect competition. I examine the implications of applying this principle in a setting where competition is imperfect, and where the market was structured prior to the introduction of competition (deregulation) and therefore not established through firms’ profit maximizing behavior. I build a stylized model that approximates the effects of a scarcity price mechanism under the hourly demand distribution observed in the Texas wholesale electricity market in 2017. I use this model to demonstrate that the scarcity price mechanism may encourage incumbent firms with large portfolios to retire plants, and that firms with a threshold amount of existing infra-marginal generation capacity will be unwilling to invest in new capacity. I then use a dynamic structural model to demonstrate that the scarcity price mechanism introduced in Texas in 2014 accelerated turnover over the period 2014-2019 by driving greater retirement of capacity in addition to greater investment, relative to a counterfactual scenario in which the scarcity price design was not implemented. In Chapter 3 I shift my focus from long-run industry dynamics and environmental policy concerning a global pollutant (carbon dioxide) to short-run dynamics and harm from a local pollutant (ground-level ozone). NOx emissions are a precursor to ground-level ozone, a pernicious pollutant that is harmful to human health and ecosystems. Despite decades of regulations including NOx emissions pricing, and a corresponding precipitous decline in NOx emissions, episodic high-ozone events prevent many areas from achieving air quality standards. Theoretically, spatially or temporally differentiated emissions prices could be more cost-effective at reducing such events than a uniform price. To test this prediction, using data from the EPA and NOAA spanning 2001-2019, we use novel empirical strategies to estimate (1) the link between hourly emissions and high-ozone events and (2) hourly marginal abatement costs. The estimates form the basis for simulations that compare uniform and differentiated emissions pricing. Consistent with economic theory, differentiated emissions pricing is substantially more cost effective at reducing high-ozone events, but this advantage depends on the accuracy of the estimated NOx-ozone relationship.
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    (2022) Wang, Haoluan; Lichtenberg, Erik; Newburn, David A.; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
    Risk is an important component of the decision-making process. Often time, risk assessment is associated with either space or time. How agents perceive risk and how they respond to risk can have significant policy implications, especially when government programs are designed to either incentivize the provision of environmental amenities or reduce the production of environmental disamenities. This dissertation features three chapters that examine the role of risk, time, and space in evaluating environmental disamenities and amenities in the context of climate adaptation and ecosystem goods and services. The first chapter studies the spillover effects of levee building in response to rising flood risks in the U.S. Mississippi. Using newly digitized data on levee locations and elevations with the Great Mississippi Flood of 2011 as a natural experiment, I show that a 1% increase in the upstream levee elevation increased the downstream levee elevation by 0.7%. A back-of-the-envelope calculation suggests the external costs due to upstream levee building are at least $0.2 billion, reducing the net benefits of heightened levees by 55%. The results highlight the importance of regional coordination to manage large-scale natural disasters while mitigating inter-jurisdictional spillovers. The second chapter uses a discrete choice experiment implemented in a farmer survey to elicit landowners’ willingness to enroll in long-term payments for ecosystem services programs in Maryland. We address the issue of serial non-participation (SNP) when landowners always choose the status quo option and examine the role of time and risk preferences in landowners’ enrollment decisions. We find that ceiling on program participation is evident when SNP is accounted for, pointing to an inherent limitation in voluntary programs. Failing to account for SNP can also lead to quantitatively different welfare measures. Landowners are responsive to program payments with low discount rates consistent with market interest rates. Risk-averse landowners are less likely to enroll in programs, suggesting that they perceive participation to increase income risk. The third chapter proposes a novel extension of existing semi-parametric approaches to examine spatial patterns of willingness to pay (WTP) and status quo effects, including tests for global spatial autocorrelation, spatial interpolation techniques, and local hotspot analysis. We incorporate the statistical precision of WTP values into the spatial analyses using a two-step methodology and demonstrate this method using data from a stated preference survey that elicited values for improvements in water quality in the Chesapeake Bay and lakes in the surrounding watershed. Our proposed methodology offers a flexible way to identify potential spatial patterns of welfare impacts and facilitates more accurate benefit-cost and distributional analyses.
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    (2022) Noh, Haeyun; Leonard, Kenneth L; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
    Health education is widely implemented in school settings to prevent risky health behaviors of teenagers. The majority of the information-based programs target adolescents, when individuals’ health attitudes and behaviors are formed. In particular, schools are a vital place to implement a health education program to reach a large number of teenagers for years in a financially sustainable and logistically convenient way. However, a body of empirical studies finds limited effects on behavioral changes. My dissertation exploits randomized controlled trials in Vietnam to investigate a school-based health education intervention. In the first two chapters of my dissertation, I examine the effects of health education on adolescents’ health outcomes. The first chapter explores multidimensional health domains, including health behaviors and psychological health factors. In the second chapter, I focus on sexual and reproductive health education to assess to which extent health education affects teenagers by evaluating the effects on health knowledge, attitudes, and behaviors. In health education programs, classroom observation is often employed to improve the quality of teaching. However, its implications on students’ learning in sensitive health topics are understudied. Against this background, in my third chapter, I investigate whether and how the presence of an observer affects students’ learning in sexual and reproductive health education.
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    (2022) Castro Zarzur, Rosa; Leonard, Kenneth; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
    Agriculture and education are often considered crucial programmatic areas for governmentsaround the globe. In their search for economic growth and social well-being, governments across the developing world implement policies aimed at enhancing human capital formation and increasing agricultural productivity. In this dissertation I study the intended and unintended impacts of three types of government programs commonly used to improve outcomes in agriculture and education. In countries where land was distributed to collectives or groups rather than to individuals,concerns about how collective ownership may hinder agricultural productivity led to a ”second wave” of land reforms . In my first chapter, I study a land tenure transition from collective to individual land rights, and present evidence on the impacts of the Philippine parcelization program. Contrary to its objective, the implementation of this transitional stage has increased tenure insecurity, albeit without affecting agricultural productivity for most farmers in the short term. In turn, higher tenure insecurity has prompted land leases and a reallocation of labor to the non-farm sector. These unintended effects are likely due to a nontransparent and lengthy implementation process stemming from governmental capacity constraints. My second and third chapters are on education. Teacher quality is one of the most relevantfactors influencing student learning and affecting human capital formation. Attracting the best candidates to the teaching profession has become central to improving education systems around the world. In my second chapter, I assess the effectiveness of an ability-based scholarship on attracting top-performing students into teaching majors. My third chapter is joint work with Miguel Sarzosa and Ricardo Espinoza. We studyhow free college, a policy that has been gaining momentum in Latin America, affects self-selection into teaching majors. We find that free college decreased the relative returns to pursuing a teaching career, making it substantially less popular among relatively poor high-performing students who now self-select into programs with higher returns. We also find that the reform reduced the academic qualifications of the pool of students entering teaching programs, which can negatively affect long-term teacher quality.
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    Inheritance Reform, Female Empowerment, and Intergenerational Effects: Theory and Evidence from India
    (2022) Ibnat, Fabliha; Leonard, Kenneth L.; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
    Land ownership is an important determinant of intra-household bargaining power in low-income countries, yet women are systematically barred from inheriting land. Granting equal access to land tenuring has the potential to improve women's ability to make decisions within the household, particularly regarding their children. This dissertation examines the effect of women’s land inheritance rights on fertility and child mortality in India. I explore this topic theoretically and empirically in three main chapters. In the first chapter I develop a household bargaining model in which granting mothers inheritance rights may affect child mortality and fertility through a direct land channel and an indirect human capital channel. The model shows how an exogenous change in inheritance rights decreases fertility and has an ambiguous effect on child mortality for some households due to two competing effects. One is an empowerment effect that results from an increase to women's bargaining power and reduces child mortality. The second is an income effect that increases child mortality and results from an increase in the pooled unearned income of the household. Which effect dominates is an empirical question. In the second chapter I empirically estimate the effect of the reforms as they operate through each channel using quasi-random variation from a natural experiment in which four Indian states enacted equal rights for women to inherit joint family property between 1986 and 1994. I construct difference-in-differences estimators using variation in eligibility across marriage cohorts and religions. Using retrospective life history and fertility history data, hazard model estimates show that the reforms reduced child mortality through the land channel and reduced fertility through the human capital channel. Children with eligible mothers have a 57% lower hazard of dying before age five. Eligible women are more likely to delay their first birth and have a 32% lower hazard of having more than two children. The results correspond to 344,169 children who were saved between the reform passage years and 2005, the survey collection year. In the third chapter I use a different dataset to identify the specific subset of households for which the theoretical model generates an ambiguous prediction. I directly test the prediction using an event study difference-in-differences model that exploits variation in eligibility across states and multiple pre- and post-reform marriage cohorts. I find that household level child mortality decreases by 2.2 percentage points, indicating that the empowerment effect dominates the income effect.