Agricultural & Resource Economics Theses and Dissertations
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Item Computational and Experimental Market Design(2010) Higgins, Nathaniel Alan; McConnell, Kenneth E; Cramton, Peter; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)This dissertation contributes to the literature on the market design of auctions. I use computational and experimental techniques to make two types of contributions to the literature. First, I provide a program that implements a state-of-the-art algorithm for solving multi-unit auctions with asymmetric bidders. This methodological contribution can be used by other economists to solve a variety of auction problems not considered in this dissertation. Second, I undertake the study of one auction environment in particular, utilizing my program to generate hypotheses when bidders participate in a particular sealed-bid, asymmetric multi-unit auction. These hypotheses are then tested in an experimental setting.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 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 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 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.Item Assessing the Efficacy of NPDES Regulation: Permit Writers' Decisions, Plants' Responses, and Impact of Pollutants on Water Quality(2008-11-17) Chakraborti, Lopamudra; McConnell, Kenneth E; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)This study provides indirect evidence that the Clean Water Act (CWA), implemented through the National Pollution Discharge Elimination System (NPDES) regulation, has been effective in terms of inducing certain 'best practice' responses from the different 'agents' involved in water pollution and its regulation. Given that cost benefit analyses of the CWA have yielded favorable conclusions, the chapters in this dissertation collect empirical evidence on whether NPDES permit writers pay attention to downstream water quality, if plants are sensitive to ambient pollution, and finally if pollutant discharges have an impact on downstream quality. Previous empirical studies incorporating ambient water quality in effluent limit or abatement choice, or pollutant inputs as a determinant of downstream water quality could not be found. These intermediate relationships are studied with Biochemical Oxygen Demand (BOD) as the primary pollutant and hence Dissolved Oxygen (DO) as the main indicator of water quality. Monthly panel data comprising a sample of 100 plants from Maryland, Virginia and Pennsylvania and 79 pairs of (downstream and upstream) water quality monitoring stations over a period of about 14 years, from 1990 to February 2004, was used. Positive evidence on efficacy of the NPDES regulation is found in all the three aspects investigated. On how regulation is implemented: if average water quality prevailing during past permit cycle is increased by one percent, then limits on BOD concentration (quantity) in the 'new' cycle would be made less stringent by 0.617 (0.322) percent. On how polluters respond to downstream water quality: if average DO prevailing during past three years is reduced by one percent, then concentration (quantity) discharges relative to effluent limits is reduced by 1.301 (1.558) percent. Finally, on how pollutant discharges from point sources have an impact on ambient water quality: if sum of BOD concentration is increased by one mg/L, then downstream net of upstream DO is reduced by 0.005 mg/L.Item Environmental Risk Factors, Health and the Labor Market Response of Households in the United States(2008-08-04) Veronesi, Marcella; Alberini, Anna; Cropper, Maureen; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)In the first part of the dissertation, I estimate the effect of a married adult's specific health condition on his or her own labor market decisions (labor force participation, earnings, hourly wages, and hours of work) and his or her spouse's. I focus on cancer, stroke, ischemic heart disease, emphysema, chronic bronchitis, chronic obstructive pulmonary disease (COPD) and asthma. The effects differ by health condition and duration of the disease. Among married men who are working, having had emphysema for less than one year is enough to reduce the earnings of a man with college degree to those of a healthy man without high school diploma. My results also suggest that if a man has had cancer, his wife may have to compensate for the ensuing loss in household income by working more hours or entering the labor force. In the second part of the dissertation, I focus on the effect of children's asthma on mothers' labor force participation, on fathers' and mothers' labor supply, and on their hourly wages and weekly earnings. I compare these effects to those of a set of health conditions that includes deformities, congenital anomalies, heart problems, epilepsy and cancer. I find that single mothers with chronically ill children are the most affected group in terms of hours of work lost and reduction in earnings, and that fathers with an asthmatic child less than six years old work more hours per week. Then, I explore how mothers' labor force participation and hours of work affect days missed from school of a chronically ill child. I find that maternal employment is associated with a higher probability of a child missing school, and that this effect is the same for healthy children as for asthmatic children. In contrast, I find that if the mother works, then a child with deformities, congenital anomalies, heart problems, epilepsy or cancer is less likely to experience lost school days than if the mother does not work. I estimate the magnitude of these effects using data from the Medical Expenditure Panel Survey for U.S. households from 1996 to 2002.Item The Value of Climate Amenities: A Disequilibrium Approach(2008-08-04) Sinha, Paramita; Cropper, Maureen L; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)Formulating efficient climate policies requires estimates of the impacts of climate change. An important category of impacts are climate amenities--the value people attach to temperature and precipitation. There is a large literature that attempts to value climate amenities using the fact that climate amenities will be capitalized into wages and property values. Many of these estimates assume that people are perfectly mobile and are based on estimates of national hedonic wage and property value functions. These functions will yield biased estimates of consumers' willingness-to-pay if consumers are not in locational equilibrium due to search or migration costs or if markets take time to adjust. I provide estimates of the value of climate amenities in the US using a discrete model of residential location choice. I model the location choices of over 400,000 households who changed metropolitan statistical areas between 1995 and 2000 using the 5% PUMS data from the Census. To avoid making equilibrium assumptions, I face the migrants with the market conditions in each MSA. The empirical model is motivated by a Random Utility Model framework, which posits that the utility that a household derives from living in an MSA depends on climate amenities along with earnings potential, housing costs and location-specific amenities. Households choose the MSA where they derive the maximum utility. The model is estimated using a two step procedure (Bayer, Keohane and Timmins, 2006). In the first stage, location-specific constants are estimated together with other parameters of the utility function. In the second stage, these location-specific intercepts are regressed on location-specific amenities to estimate the average utility attached to these amenities. The dissertation estimates the marginal rate of substitution between climate variables and income. The results show that households facing an average winter temperature of 37 degrees Fahrenheit are willing to pay approximately about 3% of their income for an increase in average winter temperature by one degree. Willingness to pay to raise summer precipitation by an inch from a level of about 11 inches is roughly 3% of their income. The study also provides estimates of the quality of life in 297 Metropolitan Areas.