Agricultural & Resource Economics Theses and Dissertations
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Item Determinants of Childhood Morbidity and the Role of Malnutrition: Evidence from Indonesia(2009) Wilson, Shannon Leigh; Cropper, Maureen L; Alberini, Anna; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)Studies that have attempted to examine the impact of early childhood malnutrition on acute illness have failed to adequately establish the causal link from malnutrition to acute illness. The empirical challenge arises because household behavioral decisions that influence investment in a child's nutrition and growth are very likely correlated with other household decisions that affect a child's incidence of illness. These include decisions to invest in hygiene and sanitation or a mother's knowledge and use of appropriate feeding practices. There may also be unobserved risk factors, such as genetic endowments, which introduce correlation between one of the regressors - nutritional status - and the error term in a disease production equation. In this dissertation, I test two basic hypotheses: (1) chronic undernutrition in early childhood, as measured by stunting in children under five, increases the probability of contemporaneous acute illness; and (2) there is a significant effect of early childhood malnutrition on the probability of developing acute illness later in childhood. I estimate a model that predicts the incidence of febrile, diarrheal and respiratory disease, diseases which combined account for the greatest total burden of morbidity and mortality in children in developing countries. I focus my research on contemporaneous and longer-term acute illness outcomes in children under five for three reasons. First, substantial research has shown that children are at greatest risk of malnutrition in the early years of life, particularly before age two (Victora et al. 2008; Ruel et al 2008). In this period, children are no longer exclusively breastfeed and they have high nutritional requirements because they are growing quickly. Second, the burden of infectious disease is disproportionately borne by children under five due to their relatively immature immune systems and their dependence on caregivers to use appropriate feeding and hygiene practices to avoid infection (Martorell 1999; Martorell and Habicht 1986). Third, since most of the literature on the long-term consequences for human capital formation focuses on conditions in early childhood, by placing this research question in the same context, it can be more clearly seen as contributing to the broader literature on human capital formation. I employ instrumental variables to allow identification of the impact of early childhood malnutrition on acute illness. I use a panel dataset from three waves of the Indonesian Family Life Survey (IFLS) to address the measurement challenges that arise due to the unobservable household factors that influence both the likelihood of early childhood malnutrition and acute illness, and the synergistic nature of malnutrition and infection. My results show a strong and statistically significant contemporaneous effect of malnutrition on the likelihood of acute illness. I find that children under five who are stunted are 16 percent more likely than children who are not stunted to report symptoms of acute illness. I find that the impact of malnutrition on the likelihood of acute illness remains positive and significant four years into the future. Children who were stunted in 1993 are still 5 percent more likely than non-stunted children to experience acute illness in 1997. While I find this impact of early childhood stunting on future illness outcomes dissipates seven years later, I present suggestive evidence that this may reflect the fact that many of the children in my sample who were stunted in 1993 are in fact no longer stunted by 2000. Overall, these results suggest that efforts at reducing early childhood malnutrition can lead not only to immediate health benefits in terms of lower rates of infectious disease, but also lead to better health outcomes in the future. Many international organizations and bilateral donors are prioritizing improvements in early childhood nutrition with the goal of improving long-term human capital outcomes (World Bank 2002; USAID 2008). The most important implication of my results is that improvements in early childhood nutrition and reducing the burden of disease are complementary objectives; improved early childhood nutrition will facilitate meeting the Millennium Development Goal of reducing the burden of disease. Further, to the extent improvements in pre-school nutritional status reduce either the incidence of acute illness, the severity of acute illness episodes, or both, such improvements may have indirect benefits. These include reducing school absenteeism which likely will enhance the acquisition of knowledge at school and lead to higher school completion rates among children in developing countriesItem Internalizing Production Externalities: A Structural Estimation of Real Options in the Upstream Oil and Gas Industry(2009) Muehlenbachs, Lucija; Nerlove, Marc; Rust, John; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)There are hundreds of thousands of crude oil and natural gas wells across North America that are currently not producing oil or gas. Many of these wells have not been permanently decommissioned to meet environmental standards for permanent closure, but are in an inactive state that enables them to be more easily reactivated. Some of these wells have been in this inactive state for more than sixty years which begs the question of whether they will ever contribute to our energy supply, or whether they are being left inactive because the environmental remediation costs are prohibitively high. I estimate a structural model of optimal well operations over time and under uncertainty to determine what conditions or policies might push any of the inactive wells out of the hysteresis in which they reside. The model is further used to forecast production from existing wells and recoverable reserves from existing pools. The estimation uses data on production decisions from 84 thousand conventional oil and gas wells and estimates of the remaining reserves of 47 thousand pools. As the producer's decision depends on their subjective belief for how prices and recoverable reserves change over time, I also estimate the probability of changes in prices and recovery technology. I model increases and decreases in the estimated recoverable reserves to depend on price, and predict that natural gas reserves are more responsive to changes in price than conventional oil reserves. Under high prices there is potential for large increases in gas reserves, however this is not the case for oil reserves when the oil price is high. And likewise, under low prices, gas reserves decrease more than oil reserves. The dynamic programming model predicts that with only a drastic, arguably implausible, increase in prices and recovery rates will there be a significant increase in the number of inactive wells that are reactivated. If ideal conditions are not enough to induce well reactivation then this implies that typically wells are left inactive not because of the option to reactivate, but rather because the cost of environmental cleanup is too high. Should there be externalities from idling the wells (such as continued contamination of groundwater) that are not accounted for in the decision, then this behavior may not be socially optimal. The model predicts that a Pigouvian tax on inactive wells would have the added benefit of inciting the reactivation of oil and gas wells, however in the case of oil, a tax would incite more wells to be decommissioned than reactivated.Item PROTECTIONISM VERSUS RISK IN SCREENING FOR INVASIVE SPECIES(2009) Lawley, Chad Damon; Lichtenberg, Erik; Olson, Lars; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)The perception that biosecurity import restrictions are used as disguised barriers to trade is widespread. Despite this perception, there has been little empirical analysis distinguishing genuine attempts to protect against introductions of foreign pests and diseases from attempts to distort trade. In this dissertation, I examine the extent to which enforcement of a biosecurity import standard - US agricultural border inspections for non-indigenous species (NIS) - is used as a disguised barrier to trade. I develop a theoretical model of border inspections that incorporates incentives to protect domestic agricultural producers from import competition as well as incentives to protect against NIS damage associated with agricultural imports. The theoretical model is used to specify an econometric model of border inspection that identifies a parameter representing the implied weight the inspection agency places on domestic producer welfare relative to consumer welfare. The structural model further identifies a parameter representing expected NIS damage as implied by the inspection agency's choice of inspection intensity. I estimate the parameters of the model using a dataset that documents the outcome of US agricultural border inspections. I find evidence suggesting that the inspection agency places greater weight on domestic producer welfare relative to consumer welfare, independent of expected NIS damage. Estimates of the implicit weight on domestic producer surplus range from 1 to 1.63. These results suggest that inspection protocols are implemented in a trade distorting manner to the benefit of domestic producers and at the expense of domestic consumers. I also find evidence that border inspections are influenced by terms of trade motives. The evidence that inspections are not implemented in a least trade distorting manner is independent of expected NIS damage. A second outcome of the econometric analysis is an estimate of expected NIS damage: I find that the inspection agency behaves as if expected NIS damage ranges from $0 to more than $0.25 per dollar of inspected imports.Item HOUSEHOLD ENERGY USE, INDOOR AIR POLLUTION, AND HEALTH IMPACTS IN INIDA [i.e. India]: A WELFARE ANALYSIS(2009) Zhang, Yabei; Just, Richard; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)This dissertation develops a unified analytical framework to understand the relationships among household energy use, indoor air pollution (IAP), and health impacts and enables policy-makers to analyze welfare effects of various interventions. This unified analytical framework includes four interlinked modules. Module 1 studies the determinants of IAP and constructs an IAP index to predict typical IAP exposure. Module 2 analyzes the impacts of IAP exposure on health, including both self-reported respiratory symptoms and physician-measured spirometry indicators. Module 3 uses a novel approach to model household behavior regarding energy technology choices based on utility maximizing behavior. Households are assumed to choose a cooking energy technology based on its attributes: cooking cost, convenience, and cleanliness. Household valuation of these attributes depends on household characteristics. Then based on the household utility function estimated from Module 3, Module 4 evaluates welfare change from various policy interventions. Empirical estimation relies primarily on two surveys recently conducted in India: a social science and environmental health survey entitled Health, Environment, and Economic Development and a multi-topic national representative sample survey called the India Human Development Survey. The two surveys were fielded between late 2004 and early 2005 and contain uniquely rich information on household energy use, indoor air pollution levels, and health indicators. This dissertation provides quantitative evidence that IAP has significant health impacts comparable to smoking. Based on analysis of IAP impacts on spirometry indicators, the evidence suggests that IAP has major impacts on restrictive lung disease rather than obstructive lung disease. These results explain why certain diseases are more highly associated with IAP exposure. Considering that traditional biomass will likely continue to be the most popular cooking fuel in rural areas of India in the near future, and that households can achieve considerable welfare gains from improvement in stoves and kitchen ventilation, the analysis suggests that the Indian government should consider reviving the improved stove program with a new advanced stove strategy coupled with conducting advocacy campaigns on how to improve kitchen ventilation. The analysis suggests small overall welfare effects of the pending phasing out of LPG subsidies.Item Essays on Split Estate in Energy Development(2008) Fitzgerald, Timothy; McConnell, Kenneth; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)Taking advantage of randomly-assigned federal mineral rights, the first essay establishes the discount that mineral developers place on oil and gas leases with divided ownership. This discount is interpreted as an expectation of reduced profits as a result of transaction costs incurred in obtaining surface access. Results of 53 bimonthy federal oil and gas lease auctions in Wyoming between February 1998 and October 2006 are examined. Bidders discount split estate by 11 to 14 percent on average, but by as much as 24 percent for more expensive leases. Impacts of multiple ownerships and additional leasing stipulations are also explored. The second essay examines how conflict between surface and subsurface owners affects production from coalbed methane wells in Wyoming. Using well-level production data from 1987-2006, wells on federal minerals with private surface are compared to those on federal minerals with federal surface. A kernel matching estimator is used to control for selection of well sites on the basis of observable information. Delays in entry on split estate are found, but are not associated with reduced production after entry. Some support is found for strategic incentives firms face regarding property rights. One way coalbed methane production differs from traditional oil and gas extraction is in the large quantities of produced water. Surface discharge has proven to be a low-cost alternative but raises the possibility of externalities. In the third essay a unique dataset linking coalbed methane wells in Wyoming to water disposal permit violations is used to explore differences in environmental performance across severed and unified minerals. A propensity score matching model is used to control for the endogeneity of tenure. The results suggest that split estate wells using surface discharge have a higher number of violations, but the severity of those violations is not significantly different from those on unified estates.Item The Relationship between Child Labor and Microfinance: Evidence from Rural Bangladesh(2009) Khadka, Manbar Singh; Leonard, Kenneth L; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)This paper analyzes the relationship between availability of microfinance and child labor in rural Bangladesh. Using household-level fixed effect in panel data, this paper shows that the stock of women's recent loans negatively impacts child labor. A 10 percent increase in the stock of recent borrowing by women reduces child labor supply by 2.58 percent. By contrast, the paper does not find any significant effect of male credit on child labor.Item Three Empirical Studies in Market Design(2009) Stocking, Andrew James; Cramton, Peter; Lange, Andreas; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)Market design is the development of mechanisms that improve market efficiency and build on an understanding of the interaction between human behavior and market rules. The first chapter considers the sale of a charitable membership where the charity poses the market design question of how to price these memberships to capture the maximum value from donors' altruism. Using an online natural field experiment with over 700,000 subjects, this chapter tests theory on price discounts and shows large differences in donation behavior between donors who have previously given money and/or volunteered. For example, framing the charity's membership price as a discount increases response rates and decreases conditional contributions from former volunteers, but not from past money donors. This chapter thereby demonstrates the importance of conditioning fundraising strategies on the specifics of past donation dimensions. The second chapter examines an auction used to solve the assignment and price determination problems where price depends on the propensity to own or farm the land, a non-market good. This chapter studies bidder behavior in a reverse auction where landowners compete to sell and retire the right to develop their farmland. A reduced form bidding model is used to estimate the role of bidder competition, winner's curse correction, and the underlying distribution of private values. The chapter concludes that the auction enrolled as much as 3,000 acres (12 percent) more than a take-it-or-leave-it offer (i.e., non-auction program) would have enrolled for the same budgetary cost. Finally, the third chapter considers the online advertising word auction. The pricing determination and assignment problem must occur for over 2,000 consumer searches each second. Theory is developed where asymmetric advertisers compete and an advertiser-optimal equilibrium bidding strategy is presented that is robust to this asymmetry. Within this rich strategy space, it is shown that advertiser subsidization can be revenue increasing for the search engine. Using a novel dataset of more than 4,500 keyword bids by three firms on four search engines, a simulation of the auction environment illustrates that bidder subsidization is indeed revenue positive and can be improved upon by imposing bid caps or fixed bids on the subsidized bidder.Item Antidumping Effects in the Presence of Collusion in an Upstream Market: the case of U.S. frozen shrimp imports from Thailand(2009) Suchato, Ravissa; McAusland, Carol; Horowitz, John K.; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)Many studies have shown a relationship between antidumping duty and collusion. These studies, however, only focus on collusion in output (downstream) market, i.e. collusion between import competing firms and exporters, or among import competing firms. This dissertation explores how the antidumping duty on downstream goods can affect collusive behavior in an upstream market of exporters whom are sub jected to the duty. Bertrand duopoly model with infinite periods is developed to examine the effect of the antidumping duty on collusive behavior. Under a set of discount rate, whether is influenced by a tariff or the antidumping duty, the exporters will fully cooperate. The unaffected rate might be due to the linearity in input supply and output demand assumptions. Although the discount rate is not suffciently high enough to support the full cooperation, the collusive behavior is still feasible through self-enforcing agreement. With future period self-enforcing agreement, under the antidumping duty, the full cooperation in the initial period that is feasible under a set of the discount rate is called "the restricted full cooperation". The set under free trade that supports the full cooperation is smaller than the one supporting the restricted full cooperation. Therefore, the antidumping duty on downstream goods is pro-collusive in the upstream market. The theoretical result is tested by using Thai shrimp industry data during 1996-2009; the industry has been sub jected to the U.S. antidumping duty since 2005. 2SLS is employed to estimate a system of Thai fresh shrimp supply, the U.S. demand for Thai frozen shrimp, and the mark up equations. Using comparative static in supply approach, with an interaction between fresh shrimp price and rainfall as a supply rotator, the empirical results confirm that the antidumping duty increases the degree of collusion among the exporters in Thai shrimp market at 1 % significant level.Item Early Childhood Nutritional Responses to Targeted Food Aid and Social Network Disruptions in Ugandan Internally Displaced Person's Camps(2009) Adelman, Sarah Wallace; Leonard, Kenneth L; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)Early childhood malnutrition, which is a series of symptoms including slow linear growth, decreased resistance to infection, and poor motor and cognitive functioning, has received increased attention in recent years as a key to economic development. While malnutrition can affect people at any age, the effects of malnutrition are most damaging in utero and during the first two years of life. Deficits during this period have long-term effects on health, educational attainment and productivity in adulthood. Thus, investing in efforts to provide children with minimal required nutrition can substantially improve future household welfare and promote economic development. In Northern Uganda, parents had limited control over their children's nutritional outcomes as nearly all rural households were living in internally displaced persons (IDP) camps due to a civil conflict. Food in these camps was scarce, sanitation conditions were poor, and health care was underprovided. Additionally, the displacement severely disrupted the strong social structures in place in the village that households relied on day to day for many activities, including care for children. This dissertation looks at early childhood health outcomes in these IDP camps and how these outcomes are affected by a food aid program and by social network influences. Chapter 3 examines the spillover effects of two types of food for education (FFE) programs on the nutritional outcomes of eligibles' younger siblings. FFE programs are criticized on the grounds that household redistribution responses mitigate nutritional benefits from the programs. However, this study shows that in some cases households redistribute program benefits to younger children who can benefit more from marginal improvements in nutritional status, which could increase returns to FFE. In Chapter 4, I look at the effects of local social networks, the friends and family that households interact with on a daily basis, on preschoolers' nutritional outcomes. Social networks can affect demand for human capital investments by relaxing household time or budget constraints or by defining and reinforcing human capital preferences. However, empirically identifying the effect of social networks on human capital investment is usually problematic because households self-select their networks in ways that may be correlated with their abilities to make these investments. In Northern Ugandan Internally Displaced Persons Camps, networks were not entirely self-selected. Rebel activity, which forced households into camps in 2002, disrupted pre-existing social networks in ways that were exogenous to household human capital preferences. This paper uses the exogenous variation in network disruption to identify the impact of networks on child health outcomes. Using household survey data from the Uganda School-Based Feeding Evaluation, household data that I collected, and administrative data from the World Food Programme and local governments, I show that an increase in the average household's network size by one household (or roughly 25 percent of the network) improves height-for-age z-scores by .25 standard deviations for children born in the camp. This improvement is equivalent to moving from the 8th percentile to the 13th percentile in height for the average child in this sample. The result stands up to numerous falsification tests. Additionally, I find no evidence that in-camp network strength impacts nutritional outcomes determined before displacement, supporting the exogeneity of the disruption to household health preferences.Item Pricing Carbon: Allowance Price Determination in the EU ETS(2008) Hintermann, Beat; Lange, Andreas; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)The allowance price in Phase I of the European Union Emissions Trading Scheme (EU ETS) followed a peculiar path, increasing from €7 in 2005 to over €30 in 2006, before crashing, recovering and ultimately finishing at zero by the end of 2007. I examine if the price can be explained by marginal abatement costs as predicted by economic theory, or if there were other price determinants. This has important policy implications, since the least-cost solution depends on the equality of permit price and marginal abatement costs and is the main argument in favor of permit markets. I start with a model that incorporates the most commonly cited market fundamentals and find that the latter only explain a small part of the allowance price variation, raising the question of a bubble. I carry out two different bubbles tests, the results of both of which are consistent with the presence of an allowance price bubble. I then address whether market manipulation by dominant power generators could have lead to the initial allowance price increase. I extend economic theory to include the interaction between output and permit markets. I derive a threshold of free allocation beyond which firms find it profitable to manipulate the permit price upwards, even if they are net allowance buyers. Market data indicates that this threshold was exceeded for EU power generators. Finally, I investigate the possibility that due to the speed at which the market was set up, firms may have been unable to engage in effective abatement before the end of Phase I. I develop a model under the assumption of no abatement, where firms aim to reach compliance exclusively by purchasing allowances on the market. Thus, the allowance payoff becomes that of a binary option, for which I derive a pricing formula. The model fits daily data from the years 2006-7 well. I conclude that the allowance price in Phase I was not driven by marginal abatement costs, but by a combination of price manipulation, self-fulfilling expectations and/or the penalty for noncompliance weighted by the probability of a binding cap.