Agricultural & Resource Economics Theses and Dissertations

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    (2024) Chen, Ying; Battistin, Erich; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
    This abstract outlines the chapters that form my doctoral dissertation. The first two chapters analyze the impacts of the 1974 Age-of-Marriage law in Indonesia, which aimed to curb child marriage.In the first chapter, I study the effectiveness of age-of-marriage laws. I discuss how age-of-marriage restrictions delay marriages and also affect the marriage market equilibrium, including not only when people marry but also who they marry. I build a theoretical model and illustrate graphically what happens when a law abruptly shifts the supply of marriageable brides and grooms. My model predicts that the age-of-marriage laws are expected to postpone first marriages universally. However, the extent of their impact on the marriage market varies depending on the strength of age-related preferences. In cases where individuals strongly favor a specific age gap between spouses, no marriage market effects are anticipated. Conversely, under weaker age-related preferences, the law alters matching in the marriage market and can affect bride prices, age gaps, or marriage rates. I then test some of those predictions with regression discontinuity estimates using birth cohort as the running variable. Using a large nationally-representative dataset, I estimate impacts of the Indonesian Law on age of marriage and probability of underage marriage for both women and men. In addition, I examine marriage-market effects by estimating impacts on the age gap between spouses as well as spouse education. My estimations based on large survey datasets support the notion that the marriage law delayed marriages and prevented under-age marriages, and also altered matching patterns, at least in the short run. Because the estimation in an RD design is complicated by the misreporting of birth dates, I deploy a range of robustness checks to bolster my findings. Though some of the robustness checks raise important caveats, my overall findings still suggest the law effectively delays marriage and alters matching in the marriage market. The second chapter further explores the effects of delaying marriage on life outcomes. I continue to rely on Indonesia’s Age-of-Marriage law and the same nationally representative dataset. I leverage a fuzzy regression discontinuity design to explore whether the law further brought about other commonly expected desirable outcomes of delayed marriage, such as higher education attainment, employment participation, health, wealth, and more. My results show that the law had a strong impact on girls education. It led to significant increases in all completion rates for girls, from primary school to bachelor degrees. This is consistent with some existing studies finding that delayed marriage can prevent girls from dropping out of school. I do not find similar impacts for men, for whom the marriageable age is 19. My results further do not suggest strong impacts on employment, but I significant positive effects on access to banking and communications, as well as health insurance. Echoing results from Chapter 1, I find strong impacts on spouse outcomes, suggesting that women who delayed their wedding married more educated and more successful men. The third chapter examines the land rental market effects of increased tenure security in the context of China’s land titling reform. Between 2009 and 2018, the Chinese government introduced a nationwide reform to register land titles for rural individual households in over 600,000 villages. To estimate the causal effect of the land reform, I leverage differences across villages induced by a pilot project of the reform conducted between 2009 and 2013. Estimates suggest that registering land titles for individual households led to a substantial increase in their participation in farmland rental markets, and allowed a shift towards non-kin tenants with a higher willingness to pay.
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    Essays on Political Economy of Development in Latin America
    (2024) Angulo Santacruz, Juan Carlos; Battistin, Erich; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
    This dissertation is composed of three applied economics essays in the intersection of development economics and political economy. The first provides an economic explanation to the increase in the intensity of conflict. The second focuses on the effects of presence of illegal activities on educational outcomes. The third analyzes the effect of mass migration on voting behavior and political preferences. Chapter 1 studies how crime may be an unintended consequence of local development. The surge in global demand for Mexican avocados, particularly from the United States, has led to increased production and revenue in avocado-producing municipalities of Mexico. I show that these external changes in avocado global consumption patterns have influenced conflict levels in Mexico. Combining geographical variations in avocado cultivation suitability and fluctuations in avocado demand over time, I find a notable rise in homicides among agricultural workers in municipalities that are well-suited for avocado production. I demonstrate that this rise in homicides is not explained by the increased presence of drug cartels but rather heightened competition between cartels for resources in municipalities where avocados are produced. These findings suggest that cartels vie for territorial control, diversifying their income sources, including the avocado industry, in response to their relatively limited influence over drug markets and routes. In Chapter 2, I turn my attention to the production of illegal crops and how it affects schooling decisions. I focus on the case of Colombian coca leaves, the main input to produce cocaine. The country's main strategy to eradicate coca crops was the fumigation of herbicide until 2015, when the practice was banned. I exploit a plausible exogenous variation in the probability of being sprayed and the temporal effects of the fumigation campaigns as an instrument for the presence of coca fields. This temporal variation along with the cross-sectional variation of the spraying campaigns lead to an instrumental variable difference-in-differences. I use data on coca presence, eradication missions, and school outcomes at the municipal level from 2012 to 2018 to test whether a change in the presence of coca crops has an effect on schooling decisions. I show that my setting does not meet all the assumptions of the traditional difference-in-differences strategy but it fits those of Fuzzy Difference-in-Differences. My empirical findings suggest that an increase in the area cultivated with coca crops increases the high-school dropout rate and it has no effect on the enrollment rate. I rule out the possibility that coca presence crowds out other legal crops. Taken together, these results suggest that high school-age individuals are leaving school to work on coca related activities. In Chapter 3, I revisit the question on whether political preferences of voters are molded by the presence of migrants. I exploit the unanticipated inflow to Colombia of Venezuelans fleeing their home country's political crisis in 2016 and the onset of economic collapse. I compare the results of the 2018 presidential campaign in Colombia across municipalities with similar trends in electoral outcomes between 2002 and 2014 but different presence of Venezuelan migrants on the verge of the 2018 campaign. To address the spatial sorting of migrants across these municipalities, I construct an instrumental variable based on the distance from the closest ports of entry. I find that an increase in the presence of migrants in the municipality yielded a polarized voting behavior. I show that these effects are explained by an increase in the electoral turnout, and that the fondness of voters for Colombia's 2016 Peace Agreement Plebiscite was an important determinant of their behavior, which has been overlooked in past empirical work.
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    Three Essays on Environmental Economics
    (2023) Beatty, Lauren; Linn, Joshua; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
    Oil and gas production is associated with numerous types of environmental damages and hazards. This dissertation is a collection of three essays which empirically examine how oil and gas production affects environmental outcomes, with a particular lens on avenues for policy to remediate these damages. In chapter 1, I focus on the joint relationship between drilling, building pipelines, and emissions. Most oil wells co-produce natural gas. Producers can choose to burn this valuable co-product on site (known as flaring) if the cost of connecting to the existing natural gas pipeline network is sufficiently high. I construct and estimate a dynamic model of producer drilling and flaring decisions which depend on the current state of the pipeline network and expectations over its evolution. My model also allows producers to internalize spillover effects for their neighbors -- any pipeline they build will extend the network and weakly decrease their neighbors' future pipeline connection costs. Using my model estimates, I simulate pipeline development and flaring outcomes under counterfactual policies. My counterfactual simulations show that flaring abatement costs are higher than previous studies but suggest that a flaring tax could substantially reduce flaring. A $\$5/$Mcf tax reduces flaring by $39\%$. In chapter 2, I focus on the non-point source pollution nature of methane emissions from oil and gas production. New scientific literature demonstrates that methane emissions from oil and gas production are a far larger problem than previously estimated. However, very little economics work has been conducted on this problem. Methane emissions are caused by leaked natural gas which escapes during the normal operation of equipment as well as leaks from faulty equipment. This implies that there are two avenues to abate emissions -- operators can install more efficient pumps and pneumatic devices, or they can expend more effort finding and fixing leaks from faulty equipment. In this chapter, I seek to understand how operators respond to prices on each margin using output from an inverse atmospheric modelling tool which outputs a gridded inventory of emissions. If producers primarily abate emissions through capital upgrades, then an input-based scheme where the regulator observes capital choices, then asses a tax on imputed emissions will be fairly efficient. I find that both channels of abatement are important, and that a tax on imputed emissions would achieve significantly less emissions reductions than an equivalent Pigouvian tax. Finally in chapter 3, I focus on policy options to deal with governmental liabilities from abandoned oil and gas wells. There are hundreds of thousands of aging oil and gas wells scattered throughout the United States that pose serious environmental and safety risks. These well sites will require billions of dollars of investment in remediation. When producers go bankrupt before remediation is complete, the responsibility to clean up the site often lands with either the state or federal government. These wells are known as orphan wells, and have received increasing attention in the scientific and policy literature. In this chapter, I estimate a model of well-level status transitions, then use my model to simulate how a policy requiring producers to either bring wells back into production or plug them after two years of inactivity would affect well orphan rates. I find that since many wells are left inactive for years at a time, this simple policy would be an effective way to decrease government plugging responsibilities and prevent environmental damage without dramatically reducing oil and gas production.
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    Fifty Shades of Green - Essays on Eco-friendly Consumption, Public Policy, and Income Inequality
    (2023) Gutiérrez Mendieta, Aldo; Uler, Neslihan; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
    This dissertation offers a thorough examination of the impact of income inequality on environmental quality, with particular attention to the obstacles encountered by low-income individuals and families in adopting sustainable and environmentally friendly consumption practices. Through the development of a general theoretical model, I provide a novel approach on understanding the dynamics of this relationship. By examining various income inequality scenarios, I assess their effects on environmental quality. Based on these findings, I propose a policy recommendation that addresses both income inequality and environmental concerns. Additionally, I propose an innovative laboratory experiment to empirically validate the theoretical predictions of the general model.In Chapter 1 I present a brief introduction emphasizing the significance of examining the impact of income inequality on the environment. he importance of exploring the individual trade-offs associated with consuming environmentally friendly goods (referred to as 'green goods'), which are more expensive, compared to their environmentally harmful counterparts (referred to as 'brown goods'), which are cheaper to buy. Building upon this framework of green and brown goods, I introduce a general model in Chapter 2 to comprehend individual behavior and investigate the impact of income inequality on environmental quality. This theoretical model offers insights into why income inequality can lead to improved, worsened, or neutral outcomes for the environment, which provides an explanation for the mixed empirical evidence found in previous studies. In Chapter 3, I propose a solution to address the issues of income inequality and the externality generated by the consumption of brown goods simultaneously. I propose the implementation of a permit market in which a regulatory agency issues a limited number of permits to cap the total demand for brown goods, thereby preventing environmental quality from falling below a predetermined threshold. Consumers have the opportunity to trade these permits, enabling income transfers from buyers to sellers and ultimately reducing income inequality. Finally, in Chapter 4 I present the design and analysis of a novel laboratory experiment aimed at empirically testing the theoretical predictions derived from the model introduced in Chapter 2. The experimental results reveal a positive effect of income inequality on environmental quality across all treatments, contradicting the predicted negative effect in specific scenarios. To account for these deviations, I augment the theoretical model by integrating two behavioral motivations, which effectively elucidate the observed behavior. These extensions not only contribute to a deeper understanding of the empirical findings but also offer promising prospects for further research exploration.
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    (2023) Eguiguren Cosmelli, José Manuel; Alberini, Anna; Archsmith, James; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
    Two critical steps for reaching lower carbon economies are associated with the performance of electricity markets. First, at the generation level, it is essential to advance in the decarbonization of the electricity mix. Second, at the consumption level, it is fundamental to incentivize a shift from fossil fuels to electricity use within the transportation, industrial, commercial, and residential sectors. Also, the study of these markets in developing economies is essential because nearly all the growth in energy demand is forecasted to come from those countries (Wolfram et al. (2012)). My dissertation consists of three essays related to electricity provision in developing countries. The first essay is about demand-side management programs among poor households in Colombia. I evaluate how low-income households in a major Colombian city respond to an unexpected hybrid price/non-price energy-saving policy. Using hourly household electricity consumption data I find that, on average, households reduce electricity consumption by 4.5% as a result of the policy. It is striking is that even low-income households, who consume relatively small amounts of electricity, respond to energy-saving policies and can engage in conservation behaviors in the short term, helping the electricity sector avoid blackouts. The effect is stronger the higher the household pre-treatment electricity consumption levels and smaller among poorer households. However, the heterogeneity in terms of income level vanishes once I control for household pre-program electricity consumption levels. The second one is related to the cost of regulation in wholesale electricity markets and provides evidence for the Chilean market. The paper concerns the side effects of price controls in regulated industries: I unveiled inefficiencies associated with cost-based offer prices -offers set administratively- in wholesale electricity markets. Using variation in the competitive environment introduced by a major transmission interconnection between the Southern and the Northern regions in Chile, I show that with the commissioning of the new transmission line, the difference in the average cost-based offer prices between coal generating units of both areas increased by 20\%. This finding is puzzling because theory suggests that an electricity interconnection should increase the extent of competition faced by electricity suppliers at both ends of it, which should imply that their offer prices tend to converge. This unexpected result directly results from manipulating the main cost parameter firms report to the regulator: the coal price. I argue that what explains this behavior is the existence of a regulatory distortion inherent to cost-based offer price wholesale market designs that compensate generating units that operate with losses, such that they will always receive a payment for the electricity they sell at least equal to their cost-based offer price, which, under certain circumstances, lead them to inflate their reported cost parameters. The adverse effect of this regulation increases in an abundance of renewable-based electricity, such as solar or wind-based ones, as is the case of the Chilean electricity market. The main implication on market outcomes associated with the opportunistic behavior I found, compare to a situation in which the coal price is imputed by the regulator, is an increase of the wholesale market price of 2.9% for the six months after the interconnection. The increase in the wholesale market price would imply a transfer from consumers to producers of US$ 88 MM in a period of one year, equivalent to 2.9% of the total revenue of the system and 6.7% of the total cost of generation. The third essay is about the role of governance and management in Latin American and Caribbean countries electric utilities' performance. The paper empirically analyzes the role of governance and management of electricity distribution utilities in the quality of the service provided and their profitability. To measure the quality of service, we use a customer satisfaction index and two standard measures of electricity service interruption -SAIDI and SAIFI. For the profitability variables, the analysis is made on the EBITDA and assets rate of return. Using data from 17 Latin America and Caribbean countries and 150 electricity distribution utilities, we found that establishing instances of governance and managements controls, investing in their commercial strategy, and improving the technical and operational capacity to reduce losses will result in a better service for their customers and higher returns for their investors. Moreover, the paper found that governance and management variables explain, in a not lesser percentage, the high heterogeneity observed among companies in their quality-of-service and profitability indicators.
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    (2023) Kraynak, Daniel; Williams, Roberton; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
    This dissertation is composed of three applied economics essays about important topicsin public and environmental economics. The first is an analysis of the distributional effects of demand shocks or demand-shifting policies in the context of energy markets and climate policy. The second focuses on the use of remote monitoring technology and its effects on the provision of the local public good of public safety. The third analyzes the effect of imperfect real-world carbon pricing policies on carbon emissions. Chapter 1 studies the impact of declining coal demand on local labor markets in coal mining regions of the US. I separate the effect of a recent contraction in the coal industry from other factors driving economic trends in coal country by constructing an instrument for coal demand from producing counties. The instrument combines a regional model of coal plant dispatch with variation in the exposure of producing counties to demand shocks from the electricity sector. My estimates demonstrate that demand-driven declines in the value of coal produced eliminate jobs primarily in coal mining and adjacent industries, with the largest effects occurring in Appalachia and the West. I also estimate decreases in in-migration, home values, and expenditures on public education, and increases in poverty. Applied in a stylized spatial equilibrium model of location choice, my estimates imply an aggregate decline of $0.5-1 billion in the economic welfare of coal country residents resulting from a net decline of $3.7 billion in thermal coal production value from 2007- 2017. In Chapter 2, using a novel data set on CCTV cameras in Chandigarh, India, we test whether police officers’ effort changes in response to the presence of traffic cameras. Although the cameras are useful in sanctioning drivers, they can also capture the passive (shirking) or active (rent-seeking) corruption of officers. Accounting for the spatial and temporal variations in the operation of the cameras, we find that the presence of a functioning camera results in an increase in on-the-ground tickets. Although we do not rule out possible decreases in rent-seeking behavior, a decline in passive corruption appears to be driving the increase in officer ticketing behavior, particularly for the most common vehicles and violations that can be observed from the CCTV cameras. Our findings indicate that remote monitoring technology can serve, if not a substitute for, then as a complement to on-the-ground enforcement. In Chapter 3, we contribute to a growing body of empirical evidence on the efficacy of carbon pricing policies, much of which finds that carbon pricing has produced only modest reductions in emissions. We hypothesize that a complex policy environment and political uncertainty are two possible mechanisms behind the limited effects measured in the literature. We focus on the experience of Australia which substantially expanded subsidies for renewable energy in 2009 and also implemented a controversial carbon “tax” from 2012- 2014 before it was repealed. Using synthetic control and recent extensions, we estimate the joint effect of the subsidy expansion and the tax to be substantial. We explore the dynamic nature of the treatment effect as it relates to the changing political environment and explore the mechanisms for the observed reduction in emissions.
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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.
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    Essays on Environmental Policies and Vehicle Market
    (2022) Lin, Yujie; Linn, Joshua; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
    This dissertation analyzes the impacts of energy efficiency standards, vehicle ownership restrictions, and passenger vehicle emission standards on the vehicle market and evaluates the welfare consequences of these environmental policies. The first chapter focuses on China's vehicle license allocations. Many megacities in China use lotteries and auctions to allocate vehicle licenses and restrict vehicle ownership, making people wait several years for a license. Recently, to promote electric vehicles, some cities introduced a separate system for electric vehicle licenses with shorter expected wait times. This chapter estimates a structural model to quantify the welfare effects of vehicle license allocation and its impact on electric vehicle adoption. I find that vehicle license allocation significantly increases electric vehicle sales. However, it also imposes a high implicit cost of waiting on consumers, engendering a consumer welfare loss of 26-52 billion Yuan in Beijing and Shanghai. Vehicle ownership restrictions also reduced automobile externalities, offsetting more than 80 percent of the consumer welfare loss. The second chapter evaluates the corporate average fuel consumption (CAFC) standard in China. I set up a structural model of vehicle supply under the CAFC standard and simulated the impacts of China's CAFC standards on the firm's profit, vehicle prices, fuel consumption, and sales. I find that the Phase III CAFC standard reduced the producer’s profit by 1.07 billion Yuan per year. Moreover, the more stringent Phase IV standard reduced the producer’s profit by 4.66 billion Yuan per year. Allowing the trading of CAFC credits will reduce the compliance costs to producers. The third chapter focuses on the welfare consequences of the passenger vehicle greenhouse gas emission standards in Europe. I show that in a differentiated product market, standards can affect virtually any product attribute, and those effects have ambiguous implications for consumer welfare. This chapter implements a novel strategy to estimate the causal welfare effects of standards on product attributes. Considering European carbon dioxide emissions standards for passenger vehicles, I find that these standards have reduced fuel consumption and emissions. However, the standards have unintentionally reduced vehicle quality, which undermines 26 percent of the welfare gains of the standards.
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    (2022) Gan, Tianqi; Cai, Jing; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
    This dissertation focuses on the economics of education in developing countries with a particular focus on parental educational investment decisions in China. In Chapter 1, I explore how parents' belief affect their investments in children's education using a randomized field experiment with parents of high school students in China. I document two types of information frictions that result in systematic biases in parents' beliefs about children's ability: overconfidence in future performance and underestimating college admission requirements. I then introduce two interventions to correct parents' belief biases. In the first intervention, I use machine-learning techniques to generate predictions on children's future academic performance and distribute them to randomly selected parents. In the second intervention, I give randomly selected parents a report that lists the feasible colleges corresponding to their children's current academic performance. I find that both interventions lead to dramatic reductions in belief biases. In addition, parents report higher levels of monetary investments in children's education, which significantly improved children's academic performance. I also find significant non-linearity in the impacts of ability belief on parental educational investments around their aspirations. In Chapter 2, I investigate the impacts of peer effects on parental educational investment decisions. Using a randomized experiment with 3379 parents of high-school students in China, I identify two channels of social influence in parents' decisions on children's educational investments: parents adjust their decisions based on other parents' behaviors because they learn from other parents' decisions ("social learning") or because their children are facing competition from peers ("competition externality"). I find that both channels have statistically significant effects on parents' investment decisions and increase their willingness to buy an educational service by over 20%. Although the average effects of the two channels are not statistically different, the main channels of peer effects are heterogeneous by parents' educational background: parents with higher education, higher income, and those who only have one child are more likely to learn from peers' decisions whereas those with lower education, lower-income, and more than one child are mainly incentivized by the competition externality. Chapter 3 provides a theoretical explanation for the empirical findings documented in Chapter 1. I introduce the reference-dependent utility theory into the parental education investment decisions by cooperating parents' aspirations into their utility and assuming parents' utility function is discontinuous at the thresholds of achieving aspirations. The modification generates an interesting non-monotonic correlation between ability and optimal educational investments around the aspirations. When children haven't achieved their aspirations, parental educational investment is substitutive to children's ability - the lower the ability, the higher the investment. In contrast, when the aspirations are already reached, parents' investment becomes complementary to children's ability - the higher the ability, the higher the investment. This model can rationalize the remedial investments behaviors.
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    Essays on Education in Costa Rica
    (2021) Vega Monge, Melissa Vanessa; Battistin, Erich; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
    My dissertation consists of three chapters related to education economics. In the first chapter, I investigate the effects of class size on educational outcomes for secondary schools of Costa Rica. To assess the impact of class size, I take advantage of an administrative rule that sets caps to the size of classes in schools. My results suggest that class-size reductions have a positive and statistically significant effect on pass rates for students in lower secondary education. In particular, a reduction of 10 students raises pass rates by 5 percentage points, which represents a 5% increase in the historical pass rate in lower secondary education. I find that the effect of class size on pass rates in upper secondary education is statistically significant only for schools in rural areas. Specifically, a class-size reduction of 10 students in upper secondary education yields an increase of 11% in the historical pass rate for rural schools. Other measures of educational attainment, such as the graduation rate, yield similar findings, but these estimates lack statistical precision. Overall, results of this chapter indicate that rural secondary schools would benefit the most from class-size reductions. This finding is important to inform the ongoing discussion in the country on how to reform class size formation, and how to allocate resources and teachers across urban and rural areas.Chapter 2 is joint work with Erich Battistin. We study the effects of granting tenure (i.e., open-ended contracts) to primary school teachers using quasi-experimental variation in job offers arising from the centralized recruitment algorithm in Costa Rica. This algorithm matches applicants to school districts using Deferred Acceptance (DA) matching with non random tie-breakers, and school-teacher matches within districts are formed at random. We use the job offers resulting from this algorithm as instruments for the tenure status of teachers in regressions that adjust for the applicant’s “risk” of being granted tenure. Using teacher employment records combined with census and payroll data, we study the interplay between improved job security, better and more stable income trajectories, and outcomes at the school of employment after tenure. Our findings indicate that tenure has negative effects on future educational outcomes. There is, therefore, a definite need to reform the current recruitment process of teachers in Costa Rica to better target high value-added applicants prior to offer tenure positions. Finally, chapter 3 evaluates the effect of unconditional salary bonuses on upward mobility and future salary trajectories of teachers, as well as on educational outcomes of students. I take advantage of the centralized recruitment process in Costa Rica, where applicants may receive different wage offers from the same school district depending on which school they are matched to by the centralized algorithm. Specifically, only certain schools within the same school district are eligible for wage bonuses. To assess the impact of being employed in a school with bonuses, I use an event study design that exploits the random assignment of applicants to positions within school districts. My findings indicate that wage bonuses have a positive impact on the career prospects of teachers. In particular, I find that being employed in a school with bonuses induces a permanent shift in a teacher’s wage profile that represents approximately 5% increase in annual earnings. Also, this permanent change in compensation allows teachers to negotiate better job positions in the future. In addition, I document a positive impact on student learning outcomes two years after receiving the bonus offer.
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    Market Structure and Congestion Externalities: Theory and application to the ride-hailing industry
    (2021) Gomez Gelvez, Julian Andres; Williams III, Roberton C; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
    The encompassing theme of this dissertation is the analysis of markets that feature market power and negative externalities. I focus mainly on congestion externalities, as externalities that affect only market participants. The first chapter evaluates the efficiency of private pricing of congestible resources. I develop a model of congestible resource use that explicitly considers a bivariate distribution of reservation values and sensitivities to congestion across potential users. This model highlights the importance of the correlation between reservation values and sensitivities to congestion to judge the efficiency of private pricing. Numerical results based on a road pricing example show that monopolistic pricing can range from very inefficient (price too high) when the correlation is negative to almost complete efficiency when it is strong and positive. The second chapter studies ride-hailing markets mediated by digital platforms like Uber. I extend the model of the first chapter to include a supply side of drivers. A monopolistic platform chooses prices on both sides of the market to maximize profit. I calibrate the model to the morning peak period of Bogota, Colombia. The results show that the price gap imposed by a monopolistic platform corresponds to about two thirds of the net marginal external cost caused by an additional ride hailer. A congestion charge on ride hailing is then justified. However, the optimal congestioncharge, as a tax on the price charged to riders, covers only 50% of the marginal external cost. The last chapter explores the effects of modifying several assumptions of the ride-hailing model developed in the second chapter. The main modification is to move from a monopolistic market structure to a duopoly. I show that absent any differentiation between platforms, competition leads to zero profits. This result supports the idea that ride-hailing markets gravitate towards a single platform. Assuming a small amount of differentiation, the duopoly equilibrium reduces the price charged to riders and increases the size of the market. This expansion reduces overall welfare due to the external effect on traffic congestion and calls for a higher congestion charge.
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    Essays on transportation and environment in China
    (2021) Shen, Chang; Alberini, Anna; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
    My dissertation focuses on environmental issues associated with the transportation sector in China. The automobile industry in China has grown exponentially in the past 20 years. The rapid growth poses enormous challenges for the reduction of CO2 emissions and pollution. My dissertation utilizes a variety of data sources and explores what policies and market incentives can effectively promote greener transportation and reduce GHG emissions and pollution.In my first chapter, I investigate how Chinese consumers value fuel economy. Understanding this is central to determining what is the optimal policy for reducing vehicle emissions under current policy environments. I find that the new vehicle market displays full valuation, ranging from 85-105% under different specifications and assumptions. Consumer accessibility to reliable fuel economy information has a positive impact on the valuation ratio. The high valuation of fuel economy suggests that a gasoline tax or carbon tax could be an efficient tool in reducing greenhouse gas emissions for China. In my second chapter, which I co-authored with Professor Joshua Linn, I look at how rapidly rising income contributes to exploding vehicle demand in China, and how we can use this knowledge to better forecast future GHG emissions. We estimate an elasticity of new car sales to income of about 2.6. This estimate indicates that recent projections of vehicle sales in China have understated actual sales by 40 percent. In my third chapter, instead of looking at GHG emissions, I look at pollution from high-emission trucks. I evaluate how a ban on these trucks improves local NO2 levels in Beijing. The result suggests that the policy helped reduce NO2 by 1.26 μg/m3, or approximately 2.6% of the NO2 level. Additionally, it was found that stations located in areas with a high density of major roads, fewer natural surroundings, and more buildings saw a more significant policy effect than their counterparts.
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    Essays on Regulatory Uncertainty & Energy Development in the American West
    (2021) Hunt, Jeffrey; Linn, Joshua; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
    This dissertation undertakes an analysis of regulation in the American West, investigating the effects of expropriation uncertainty and technological change in the leasing process.The first chapter explores the possible expropriation of drilling rights due to the addition of the sage-grouse under the Endangered Species Act. Leveraging prior decisions of the US Fish and Wildlife Service, I estimate there was a 52.6% chance the sage-grouse would be listed. Using the real-options framework of Kellogg (2014) and constructing an extension of his simulation to accommodate expropriation risk parameterized by real-world drilling data, I find that developers are expected to delay spudding wells to wait out the uncertainty. This result is corroborated with a Cox proportional hazards model. Additionally, using a difference-in-differences model I find robust evidence that developers reduce their bids for leases commensurate with the expected reduction in profits from possible regulation, and using a conditional logit discrete choice model I find evidence that firms abandon core sage-grouse habitat. Lastly, I find no evidence that developers increase the extraction rate of drilled wells. The second chapter investigates expropriation risk in the context of ozone pollution controls from the Environmental Protection Agency. Here, I find a hurry-up-and-drill response. I place this result within the literature of the green paradox, and find that the EPA regulation did not produce a green paradox but if costs were lower, or if the regulation were modified, a green paradox would have existed and briefly result in higher emissions under a stricter regulatory regime. The policy takeaway is that regulators should avoid a long announcement period, as it gives developers time to drain wells before regulation occurs. The third chapter is a cost/benefit test of auctioning drilling leases online rather than in-person. I leverage the fact that only specific leasing jurisdictions transitioned to an online system called EnergyNet in late 2016 to estimate the causal effect of moving to online leasing. I estimate that a given parcel sold online versus in-person will generate 40% higher bids against only a 2% extra cost.
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    The Role of Information in Policy Implementation
    (2020) Andarge, Tihitina Tesfaye; Lichtenberg, Erik; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
    Firms will comply with a regulation when the expected costs of noncompliance exceed the expected benefits. If the regulator has incomplete enforcement information and firms are aware of this, it will enter into their calculation of expected benefits and costs. The literature on regulatory enforcement typically assumes that the regulator is able to identify the universe of regulated firms. In my dissertation, I relax this assumption by allowing for the existence of regulatory information gaps and examine the implications for compliance and ambient environmental quality. The first chapter reviews the literature on the enforcement of environmental regulations. The second chapter examines the effect of regulatory information gaps on a firm’s compliance strategy. The theoretical results indicate that a firm with a sufficiently low probability of being subject to enforcement action will delay compliance. This prediction is tested empirically in the context of nutrient management regulations in Maryland. The econometric results indicate that the probability of being included in the MDA farm registry is associated with a statistically significant increase in the probability of being in compliance with nutrient management regulations. If information gaps have an effect on a firm’s compliance decision, then they may potentially have consequent effects on ambient environmental quality. In the third chapter, I develop a theoretical model of the firm’s optimal level of emissions under information gaps. The theoretical results indicate that the optimal level of emissions is decreasing in the likelihood of being known to the regulator. If decreases in a firm’s emissions result in decreases in ambient pollution levels, then ambient pollution levels are also decreasing in the probability of being known. I test this prediction empirically within the context of Clean Water Act (CWA) permit regulations. The empirical results indicate that a one percentage point increase in the share of firms known to the regulator results in a 0.43% - 0.49% percent decrease in ambient pollutant concentration for three out of the four pollutants. Increasing the share of known firms by 5 percentage points could lead to benefits, in terms of improved water quality, of $165.9 million per year.
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    An Economic Study of 128 Dairy Farms on the Upper Eastern Shore of Maryland
    (1938) Smith, Carl B.; DeVault, S.H.; Hamilton, A.B.; Agricultural & Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md)
    This study analyzes the second year's survey or 128 dairy farms, representative of the dairy industry on the Upper Eastern Shore of Maryland. This area, which includes Cecil, Kent, Queen Anne's, Talbot, and Caroline counties, is a part of the Philadelphia Milk Shed.
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    (2019) Kraus Elsin, Yoanna; Lichtenberg, Erik; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
    Deforestation worldwide is a major concern. In developing countries, it is a merciless and devastating reality. My thesis addresses how local governance institutions' strength influences this phenomenon, focusing on the Colombian Andes. The theoretical analysis examines spatial patterns of illegal deforestation when enforcement is costly, and costs rise with distance from governmental centers. Those spatial patterns depend on the interaction between transportation costs incurred by farmers growing crops on deforested land and enforcement costs incurred by government officials conducting on-the-ground monitoring of deforestation. Areas closer to governmental centers can be monitored effectively and are thus less subject to illegal deforestation. Illegal deforestation is, therefore, more likely in areas where monitoring costs are high, but farmers' transportation costs are not. The calibration exercise then shows, that in this context, patches of deforestation might arise within the forest, causing unwanted forest fragmentation. Based on these results I study empirically, first, if the effect of access difficulty on deforestation may be non-monotonic in accessibility, causing forest fragmentation; and second, if this fragmentation is more likely to occur when enforcement is more costly. I approach this question in two manners: (1) using a cubic function of access difficulty interacted with measures of enforcement capacity and (2) non-parametrically using indicators for discrete ranges of access difficulty, again interacted with measures of enforcement capacity. I construct for this purpose a panel data set for the Colombian Andes from a variety of sources. Data on deforestation comes from satellite imaging at a 30mx30m resolution in two periods (2000-2005) and (2005-2010), this data was matched with biophysical variables such as, altitude, slope, precipitation, soil type, and roads using geographical information systems (GIS), as well as with socioeconomic variables which vary by municipality and time. The regressions show a significant non-monotonic effect of access difficulty on deforestation. The evidence shows that deforestation probability first decreases with access difficulty, and it then increases in remoter places. This evidences forest fragmentation as one moves away from roads. Moreover, this pattern is affected by the fiscal performance index (a proxy for enforcement capacity) of the municipalities, showing that municipalities with lower enforcement capacity have a higher probability to present illegal deforestation at remote places. This research adds to the deforestation literature, by studying the spatial reach of governance capacity and how it affects deforestation patterns. The findings highlight the importance of taking enforcement and monitoring costs as well as their spatial variation into account when designing land-use policies and defining the institutional arrangements, funding and monitoring processes to implement them.