Agricultural & Resource Economics Theses and Dissertations
Permanent URI for this collectionhttp://hdl.handle.net/1903/2739
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Item SPATIAL EFFECTS OF LOCAL GOVERNANCE INSTITUTIONS ON ILLEGAL DEFORESTATION IN DEVELOPING COUNTRIES(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.Item ESSAYS ON ENVIRONMENTAL ECONOMICS: CARBON TAX, PRICE REGULATION AND RESIDENTIAL ELECTRICITY CONSUMPTION(2019) Wang, Jikun; Williams, Roberton; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)This dissertation features three essays in environmental economics. In the first essay, I analyze how price regulation changes the welfare effects of carbon emission policies. Specifically this paper shows that electricity price regulation in China substantially increases the cost of reducing carbon emissions. I set up a simple general equilibrium model where the price of the carbon intensive sector (electricity) is regulated and examine the welfare impact of a revenue-neutral carbon tax. The model shows price regulation has a direct cost effect and also changes the secondary cost effects caused by pre-existing taxes. I then construct a static CGE model where the parameters are calibrated using stylized facts about the economy of China in 2007. My central estimate shows the marginal cost of achieving a 20% reduction in CO2 emissions is 22% higher in the presence of pre-existing taxes than in a world with only a carbon tax. Price regulation raises the marginal cost of CO2 reduction by a further 27%, on top of the distortion caused by pre-existing taxes. The second essay studies the implication of relaxing electricity price regulation, both in the context of pre-existing taxes and in the context of carbon pricing policy. It employs a general equilibrium model of the Chinese economy and provides ex-ante counterfactuals under a range of electricity regulation policy and assess the social welfare impact with potential electricity market reform. It shows pre-existing labor tax increases the per unit social benefit of deregulation. The analysis also shows carbon emission policy increases the per unit benefit of electricity deregulation compared with second-best setting. The third essay uses micro-level data in China to study the impact of urban heat island on residential electricity use (REU). Combining a household energy consumption survey in China with remote sensing data related to urban heat island intensity and weather conditions specific to each household, the empirical analysis shows that urban heat island has a significant effect on residential electricity use, through interacting with local weather conditions such as temperature. Higher urban heat island increases residential electricity consumption by increasing the impact of Degree Days on REU. The effect also varies seasonally and regionally.Item Environmental Federalism: Chinese Governmental Behaviors in Pollution Regulations(2019) Yan, Youpei; Lichtenberg, Erik; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)China's economic growth has come with the cost of environmental deterioration. The economy has faced with many problems in land resource depletion and industrial pollution. I examine two policies that tackle three major environmental aspects on land, water, and air in China. All three chapters share the theme that devolution without enough oversights in environmental policies has lead to unintended consequences in practice, as local officials have their trade-offs to promote local economy and protect environment. The first chapter explores the local government's behavior in a land conservation program, which intends to reduce soil erosion by subsidizing afforestation of low productive farmland on steep slopes. Theoretically, the incentives created by the program combined with insufficient oversight have led to afforestation of highly productive farmland on level ground. With a unique land transition dataset, I show that this unintended land use effect has been substantial. This unexpected displacement of highly productive farmland represents a form of leakage that has not been fully explored in the literature. And it is problematic to a country with limited arable land relative to population size as it can negatively impact national food production targets and self-sufficiency goals. The second chapter investigates water pollution activities under China's Pollution Reduction Mandates. In response to the substantial environmental deterioration, the central government taxes firm emissions and subsidizes abatement technology installation. In theory, devolution to local governments to lower pollution and promote economic growth can create local incentives to allocate subsidies to effectively export pollution. I provide the first evidence of the magnitude of these distortions with unique firm-level pollution panel data and find evidence of water pollution exported to downstream and further away from local residences. A simulation indicates that the distortions created by local jurisdictional control harm the environment substantially: centralized allocation of subsidies could reduce total emissions by 20-30%. The third chapter keeps investigating the inter-jurisdictional pollution externalities on air pollution under the same mandates. It provides a complimentary evidence to show that local governments have incentives to promote spatial spillovers and free-ride on the downwind neighbors.Item Essays on the Efficient Management of Water Resources(2019) Rosenberg, Andrew; Olson, Lars J; Newburn, David A; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)In the first analysis of this dissertation, I assess the water use savings and cost-effectiveness of the Conservation Reserve Enhancement Program (CREP) in the Upper Arkansas River basin in Kansas, a water rights retirement program aimed at reducing depletion of the High Plains Aquifer. First, I use a fixed effects model with matched samples of farmers to determine the effect of CREP on water use. I find that for every unit of authorized water use retired in CREP, 0.8 units of water are saved per year. Second, I examine how a rights retirement program would perform outside of the policy region and how the existing program design could be improved upon. I estimate a probit regression to determine which factors most influence the probability that a farmer enrolls in CREP. Using the results of the probit regression, I then simulate enrollment decisions outside of the policy region to assess the cost-effectiveness of different incentive designs. I find that programs that pay incentives based on past levels of water extraction save water more cheaply than programs that pay based on acreage retired. I also find that programs such as CREP that offer higher incentive rates to farmers that enroll later are more efficient than programs that never increase rates. In the second analysis, coauthors and I assess the household value for stream restoration, a common approach used by local governments to mitigate the water quality impacts of urban stormwater. We conduct a choice experiment in the Baltimore metro region to examine household willingness to pay (WTP) for stream restoration. We vary the land ownership of restoration locations and the distance from households to streams in hypothetical choice scenarios that include changes in several stream restoration attributes. Our results indicate that household WTP for improvements in stream bank stabilization and nutrient reduction are positive and significant on public and private land across all distances. We find significant heterogeneity in WTP across land ownership and proximity to a stream. This heterogeneity in WTP can be of particular interest to policy makers when making decisions about where, and even how, to restore streams.Item Essays on the Effects of Air Pollution on Human Health(2018) Ruiz-Tagle, Juan Cristobal; Williams, Roberton C; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)According to recent reports by The World Bank and the World Health Organization millions of people die every year because of exposure to ambient air pollution—the vast majority of them in developing countries (World Bank 2016; World Health Organization 2016). Policy makers throughout the developing world are starting to seriously address this issue by designing and implementing a battery of policies for reducing ambient air pollution. To weight the cost and benefits of these policies policy makers need estimates of the benefits of reducing ambient air pollution. In this dissertation I provide estimates of the benefits of air pollution reduction in terms of its effects on human health. I use data from Chile, a middle income country that in recent years experienced a period of rapid industrialization and economic growth—similar to the process that many developing economies are experiencing these days. I believe that estimates and methods from this dissertation can provide a valuable tool to aid policy makers in the developing world in their goals to reduce ambient air pollution. Chapter 1 examines the effects of exposure to ambient air pollution on infant mortality. Using state-of-the art techniques to identify causal effects and reduce possible bias due to measurement error in air pollution exposure, results from this chapter show significant effects of exposure to ambient air pollution on infant mortality. This effect is larger for infant mortality due to respiratory and cardiovascular diseases. Chapter 2 examines the effect of exposure to ambient air pollution on urgent care visits for different age groups and across different types of urgent care visits. Using a novel strategy to identify causal effects, results from this chapter show a significant effect on respiratory urgent care visits and on cardiovascular and circulatory urgent care visits. This effect is larger for the elderly and for respiratory urgent care visits due to pneumonia and lower respiratory diseases. Chapter 3 examines the effect of exposure to ambient air pollution on the probability of a pregnancy ending in a stillbirth delivery. Results from this chapter show a significant effect of acute exposure to air pollution on the probability of stillbirth delivery. This effect is larger for those stillbirths that are due to hypoxia.Item THE INCIDENCE OF TRADE WARS: EVIDENCE FROM THE US SOLAR INDUSTRY(2018) Wang, Wenjun; Alberini, Anna; Houde, Sebastien; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)Trade wars between countries in the renewable energy sector have proliferated in recent years, potentially hindering the growth of the industry. This dissertation investigates the welfare effect of anti-dumping policies initiated by the US government against Chinese manufacturers. It focuses on the US solar industry, which has grown more than thirtyfold over the past ten years. Chapter 1 describes the policy background leading to the trade war, together with institutional details of the industry. Furthermore, it proposes a two-country theoretical model to formalize how anti-dumping policies affect the market in equilibrium. Chapter 2 estimates a structural econometric model with a differentiated demand system and marginal cost for solar manufacturing that incorporates the vertical structure between upstream solar manufacturers and downstream solar installers. The estimation results suggest large markups among solar manufacturers and installers. Chapter 3 conducts policy simulations and shows the impact of trade war on the US solar market. In particular, it considers different changes in anti-dumping duty and subsidy rates, and evaluates the welfare effect among different market participants. The results show the anti-dumping policy has decreased producer surplus and consumer surplus by around $874 million (in 2015 US dollars) and has increased the greenhouse gas emissions by 5.98 million tons for the period 2010 - 2015. The installation capacity of US solar market would have increased by 36.4% if there had been no anti-dumping policies. Compared with the large decrease in profits for Chinese solar manufacturers, US manufacturers benefit only slightly from the US anti-dumping policy. Chapter 4 further investigates the welfare effects of trade policies on the population of consumers, by using a random coefficient discrete choice model which captures the heterogeneity in consumer tastes for differentiated products. It then explores the welfare change among different groups of consumers. The results show that consumers who are relatively less sensitive to solar panel price (i.e., consumers who reside in areas with higher median income, a lower percentage of households with children and a higher proportion of democratic supporters) would benefit the most if there had been no anti-dumping duties. Chapter 5 concludes and discusses the issue of trade protectionism occurred in other industries.Item Regulation, Market and Technology: Evidence From the U.S. Trucking Industry(2017) He, Zheng; Houde, Sébastien; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)My dissertation focuses on the environmental regulations in the trucking industry and their impacts in the United States. I explore the causal effects of environmental policies on trucking decisions, the technological challenges of reducing fuel consumption and the optimal fuel taxes to account for the externalities of trucking operation. As the fuel economy standards for medium- and heavy-duty trucks are finalized in August 2016, my dissertation addresses a timely and important issue -- how to effectively reduce greenhouse gases emissions from trucking operation. Three essential policy tools are examined -- taxes, fuel economy standards, and engine replacement schedule. In the first essay, I exploit a rich vehicle-level micro dataset of the U.S. heavy-duty trucking fleets to examine how truckers respond to changes in per-mile fuel cost. Per-mile fuel cost depends on the fuel economy of the vehicle and on the price of diesel, which is taxed at a different rate than other motor fuels. The U.S. Environmental Protection Agency (EPA) categorizes medium- and heavy-duty trucks into two groups - combination trucks and vocational vehicles. They are regulated separately due to their distinctive driving patterns and trip distances. Combination trucks are tractor-trailers weighing more than 26,000 pounds, typically with a body type of either an enclosed box or a platform. They are mostly used for long-haul shipping. Vocational vehicles are straight trucks (with a loading area as part of the vehicle) with gross vehicle weight greater than 10,000 pounds. They travel locally for various professional purposes and include step vans, dump trucks, concrete mixers, etc. My empirical results show that the average medium-run elasticities of vehicle-miles-traveled are -0.23 for combination trucks and -0.27 for vocational vehicles; the average elasticities of payload distance are -0.43 for combination trucks and -0.36 for vocational vehicles. Within each of the two groups, the estimated elasticities vary significantly among different truck weight classes and business sectors. The heterogeneity in truckers' responsiveness calls for differentiated policies, particularly in fuel taxes. I derive the optimal fuel taxes in a general equilibrium model that includes the externalities of truck operation (such as air pollution, road damage, accidents, and noise pollution), measures shipping demand in terms of payload distance and allows truckers to choose their routes based on shipping demand. In the second-best setting, most of the optimally differentiated diesel taxes are about twice or three times the actual rate. Compared to the optimal uniform tax, implementing differentiated taxes based on vehicle weight classes reduces the existing distortion and generates an overall welfare gain of about 17.5 billion US dollars per annum. In the second essay, I look at the evidence about fuel economy and other truck attributes from the U.S. Vehicle Inventory and Use Survey (VIUS). I estimate the trade-off effects between fuel economy and truck attributes, providing implications for a dynamic baseline of improvements in fuel economy. My estimation results show that the annual rates of fuel economy improvement from 1973 to 2002 are about 0.93% for combination trucks and 0.83% for vocational vehicles. In other words, in the absence of regulations, we can expect reductions in fuel consumption by 8.01% for combination trucks and 7.15% for vocational vehicles in ten years, just under half of the targets. The difference in technological progress among fleets with various sizes suggests that incentivizing trucking fleets to update their vehicles more frequently can be an effective channel to improve overall on-road in-use trucks' fuel economy. In the third essay, I examine the industry responses to the California Statewide Truck and Bus Regulation -- a schedule for truckers to retrofit or replace their vehicles -- using two empirical approaches. First, the arbitrary choice of the cutoff year allows me to conduct a regression discontinuity design. I find a 71.4% reduction in the population of targeted truck group as the deadline approaches. Second, I compare the targeted group with trucks having similar body types but different model years and investigate the effect in a difference-in-difference framework. Once the natural business-as-usual rate of replacement is accounted for, the estimated reduction in truck population due to the regulation drops to 57.8%. Using this estimate and necessary assumptions, I also back out the proportion of trucks registered in NOx-exempt counties that are solely operated within these counties.Item Behavioral Response to Environmental Taxation: Evidence from the Transportation Sector(2016) Cerruti, Davide; Alberini, Anna; Williams III, Roberton; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)This dissertation analyzes how individuals respond to the introduction of taxation aimed to reduce vehicle pollution, greenhouse gases and traffic. The first chapter analyzes a vehicle registration tax based on emissions of carbon dioxide (CO2), a major greenhouse gas, adopted in the UK in 2001 and subject to major changes in the following years. I identify the impact of the policy on new vehicle registrations and carbon emissions, compared to alternative measures. Results show that consumers respond to the tax by purchasing cleaner cars, but a carbon tax generating the same revenue would further reduce carbon emissions. The second chapter looks at a pollution charge (polluting vehicles pay to enter the city) and a congestion charge (all vehicles pay) adopted in 2008 and 2011 in Milan, Italy, and how they affected the concentration of nitrogen dioxides (NOx). I use data from pollution monitoring stations to measure the change between areas adopting the tax and other areas. Results show that in the first quarter of their introduction, both policies decreased NOx concentration in a range of -8% and -5%, but the effect declines over time, especially in the case of the pollution charge. The third chapter examines a trial conducted in 2005 in the Seattle, WA, area, in which vehicle trips by 276 volunteer households were recorded with a GPS device installed in their vehicles. Households received a monetary endowment which they used to pay a toll for each mile traveled: the toll varied with the time of the day, the day of the week and the type of road used. Using information on driving behavior, I show that in the first week a $0.10 toll per mile reduces the number of miles driven by around 7%, but the effect lasts only few weeks at most. The effect is mainly driven by a reduction in highway miles during trips from work to home, and it is strongly influenced by past driving behavior, income, the size of the initial endowment and the number of children in the household.Item Essays in Personal Transportation Demand and Consumer Finance(2016) Evans, Jaclyn; Williams, Roberton C; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)This dissertation is composed of three essays covering two areas of interest. The first topic is personal transportation demand with a focus on price and fuel efficiency elasticities of mileage demand, challenging assumptions common in the rebound effect literature. The second topic is consumer finance with a focus on small loans. The first chapter creates separate variables for fuel prices during periods of increasing and decreasing prices as well as an observed fuel economy measure to empirically test the equivalence of these elasticities. Using a panel from Germany from 1997 to 2009 I find a fuel economy elasticity of mileage of 53.3%, which is significantly different from the gas price elasticity of mileage during periods of decreasing gas prices, 4.8%. I reject the null hypothesis or price symmetry, with the elasticity of mileage during period of increasing gas prices ranging from 26.2% and 28.9%. The second chapter explores the potential for the rebound effect to vary with income. Panel data from U.S. households from 1997 to 2003 is used to estimate the rebound effect in a median regression. The estimated rebound effect independent of income ranges from 17.8% to 23.6%. An interaction of income and fuel economy is negative and significant, indicating that the rebound effect may be much higher for low income individuals and decreases with income; the rebound effect for low income households ranged from 80.3% to 105.0%, indicating that such households may increase gasoline consumption given an improvement in fuel economy. The final chapter documents the costs of credit instruments found in major mail order catalogs throughout the 20th century. This study constructs a new dataset and finds that the cost of credit increased and became stickier as mail order retailers switched from an installment-style closed-end loan to a revolving-style credit card. This study argues that revolving credit's ability to decrease salience of credit costs in the price of goods is the best explanation for rate stickiness in the mail order industry as well as for the preference of revolving credit among retailers.Item Agriculture, Environmental Incentive Payments, and Water Quality in the Chesapeake Bay(2016) Fleming, Patrick; Lichtenberg, Erik; Newburn, David; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)Nonpoint sources (NPS) pollution from agriculture is the leading source of water quality impairment in U.S. rivers and streams, and a major contributor to lakes, wetlands, estuaries and coastal waters (U.S. EPA 2016). Using data from a survey of farmers in Maryland, this dissertation examines the effects of a cost sharing policy designed to encourage adoption of conservation practices that reduce NPS pollution in the Chesapeake Bay watershed. This watershed is the site of the largest Total Maximum Daily Load (TMDL) implemented to date, making it an important setting in the U.S. for water quality policy. I study two main questions related to the reduction of NPS pollution from agriculture. First, I examine the issue of additionality of cost sharing payments by estimating the direct effect of cover crop cost sharing on the acres of cover crops, and the indirect effect of cover crop cost sharing on the acres of two other practices: conservation tillage and contour/strip cropping. A two-stage simultaneous equation approach is used to correct for voluntary self-selection into cost sharing programs and account for substitution effects among conservation practices. Quasi-random Halton sequences are employed to solve the system of equations for conservation practice acreage and to minimize the computational burden involved. By considering patterns of agronomic complementarity or substitution among conservation practices (Blum et al., 1997; USDA SARE, 2012), this analysis estimates water quality impacts of the crowding-in or crowding-out of private investment in conservation due to public incentive payments. Second, I connect the econometric behavioral results with model parameters from the EPA’s Chesapeake Bay Program to conduct a policy simulation on water quality effects. I expand the econometric model to also consider the potential loss of vegetative cover due to cropland incentive payments, or slippage (Lichtenberg and Smith-Ramirez, 2011). Econometric results are linked with the Chesapeake Bay Program watershed model to estimate the change in abatement levels and costs for nitrogen, phosphorus and sediment under various behavioral scenarios. Finally, I use inverse sampling weights to derive statewide abatement quantities and costs for each of these pollutants, comparing these with TMDL targets for agriculture in Maryland.