Agricultural & Resource Economics Theses and Dissertations
Permanent URI for this collectionhttp://hdl.handle.net/1903/2739
Browse
8 results
Search Results
Item THREE ESSAYS IN ENERGY ECONOMICS(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.Item ESSAYS ON ISSUES IN PUBLIC AND ENVIRONMENTAL ECONOMICS(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.Item ESSAYS ABOUT THE ELECTRICITY SECTOR IN CHINA(2019) Que, Guanghui; Alberini, Anna; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)China, with the largest electricity consumption market in the world, is in the process of market-oriented reform on its electricity industry and trying to encourage energy saving and enhance energy efficiency by implementing nonlinear pricing mechanisms. This thesis broadly investigates such policies through three related essays. The first essay investigates how Chinese households have responded to new nonlinear pricing schemes and estimates the price and income elasticities of demand. I use three complementary approaches. Based on an extensive household-level administrative dataset, I first perform a bunching test to see if consumers appear to be responding to non-linear pricing. Second, I estimate a double-log demand function using household-level consumption data during peak and off-peak time. I use instrumental variable techniques to address issues of endogeneity. Third, using survey data with extensive information about the stock of energy-using durables owned by households, combined with monthly usage records, I fit a structural model that includes time-of-use and increasing block rates pricing. I find evidence of remarkable heterogeneity in the price and income elasticities, depending on the stock of appliances, income level, and total electricity consumption. This provides support for the notion that increasing block rates give stronger incentives to households with higher consumption levels. Policy simulations under two alternative scenarios show that households do decrease their total electricity consumption significantly when the pricing schemes change from uniform pricing to non-linear pricing such as time-of-use pricing and increasing block rates. The second essay investigates the vertical integration economies between transmission and distribution of the electricity industry. Using unique administrative cost data of 24 province utility companies in China, I first estimate a quadratic cost function. To investigate the vertical integration economies thoroughly, I define transmission and distribution based on three counterfactual scenarios, treating the 220kV and above network, 110kV and above network, 35kV and above network as transmission under the first, second, and third scenarios respectively. Then I estimate the vertical integration economies under these three scenarios. Results show that there do exist significant vertical integration economies and that the vertical integration economies have grown over time. I also find evidence of remarkable heterogeneity in the vertical integration economies. Utility companies with high consumption intensity have larger vertical integration economies. Also, vertical integration economies are larger under the first scenario than the second and third scenarios. All these results support the conclusion that currently, the separation of transmission and distribution would cause significant cost increase, which will be transferred to end consumers. The third essay investigates how stock prices of generation companies and major industrial electricity users react to the electricity on-grid and retail tariff adjustments and announcements of future market-oriented reform plans in China using the event-study method. Attention is restricted to publicly listed generation companies and major industrial electricity users. Using two different windows periods (5 business days before and after the events, the short-term, and 10 business days before and after the events, the mid-term), I find that stock prices do not respond significantly to the announced future reform plans. This may betray the consumer’s belief that future reform plans will not be implemented effectively and thoroughly in China. By contrast, the stock prices of generation companies and major electricity consumers do react significantly and negatively to tariff adjustments in both the short- and the mid-term.Item ESSAYS ON ENERGY EFFICIENCY AND FOREST CONSERVATION(2015) Maher, Joseph Andrew; Just, Richard; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)This dissertation is composed of three essays in environmental economics related to residential energy efficiency and forest conservation. My first paper assesses the effectiveness of energy-efficient technologies in the setting of a utility rebate program. To date, the energy savings from energy-efficiency building retrofits are assessed using ex-ante engineering models. My analysis provides the first evaluation of engineering models that uses residential billing data, combined with data on observable characteristics of each residence, to assess the accuracy of engineering predictions across nine retrofit technologies used in Gainesville, Florida. My second essay presents the first causal evidence that trees have a major impact on consumer demand—with large shade trees reducing household electricity use by more than 20 percent. This work contributes to the existing literature on the energy saving potential of urban forests by implementing a quasi-experimental design to identify a causal link between tree shade and energy use. Results suggest that the energy savings from tree shade are an order of magnitude greater than other energy-efficiency policy measures, providing new evidence that tree ordinances may serve as effective demand-side management policies. My third essay assesses the effectiveness of forest conservation policies in reducing carbon emissions from deforestation. To date, the effectiveness of protected areas has been assessed using cross-sectional methods. In this essay, new quasi-experimental models using panel data on annual deforestation are used to reveal new insights into the importance of government oversight of protected areas with findings that counter economists’ prior notions of the avoided deforestation of new parks. I extend the analysis to estimate avoided carbon emissions, a key policy metric that varies considerably from deforestation trends.Item ESSAYS ON ENERGY AND ENVIRONMENT IN INDIA(2013) Malik, Kabir; Cropper, Maureen; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)Expanding electricity generation is driving economic activity in the developing world. Increasing energy demand, largely met through the combustion of coal and natural gas, poses significant trade-offs between development objectives and environmental well-being. In this dissertation I examine the Indian electricity sector. Chapter 1 studies the impact of regulatory changes affecting state-owned electricity utilities on the efficiency of coal-fired power plants. The results indicate that the unbundling of generation companies from state-owned utilities improved operating reliability at coal-fired power plants. The improvements were, however, restricted to states that restructured their electricity utilities prior to the Electricity Act of 2003. The results also show that the reforms did not result in an improvement in thermal efficiency or capital utilization at these plants. Chapter 2 estimates the health impacts from PM2.5, SO2 and NOx emissions from coal-fired plants in India. I derive estimates of the total premature mortality impact from each plant in my sample associated with each of the three pollutants. I find that the majority of the impact, about 70%, is due to SO2 emissions--a pollutant currently unregulated in India due to the low sulfur content of Indian coal. I also conduct a cost benefit analysis of two pollution control options currently available in India--coal washing and the installation of an flue-gas desulfurization unit (FGD). The results from the case study show that both options pass the cost-benefit test using reasonable estimates of the Value of a Statistical Life (VSL) for India. Chapter 3 more thoroughly examines the benefits and costs of FGD retrofit at coal-fired power plants in India. Using emissions estimates and output from a medium-range Lagrangian puff (atmospheric) model I estimate the net benefits of FGD installation for a sample of power plants. The results show that a substantial proportion of power plants pass the cost-benefit test for an FGD installation using reasonable estimates of the VSL for India. The results indicate a substantial scope for FGD installation to control SO2 emissions in the Indian power sector and suggest that it should be considered as a viable option for pollution control policy.Item Wind Power Development in the United States: Effects of Policies and Electricity Transmission Congestion(2013) Hitaj, Claudia; McConnell, Kenneth E; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)In this dissertation, I analyze the drivers of wind power development in the United States as well as the relationship between renewable power plant location and transmission congestion and emissions levels. I first examine the role of government renewable energy incentives and access to the electricity grid on investment in wind power plants across counties from 1998-2007. The results indicate that the federal production tax credit, state-level sales tax credit and production incentives play an important role in promoting wind power. In addition, higher wind power penetration levels can be achieved by bringing more parts of the electricity transmission grid under independent system operator regulation. I conclude that state and federal government policies play a significant role in wind power development both by providing financial support and by improving physical and procedural access to the electricity grid. Second, I examine the effect of renewable power plant location on electricity transmission congestion levels and system-wide emissions levels in a theoretical model and a simulation study. A new renewable plant takes the effect of congestion on its own output into account, but ignores the effect of its marginal contribution to congestion on output from existing plants, which results in curtailment of renewable power. Though pricing congestion removes the externality and reduces curtailment, I find that in the absence of a price on emissions, pricing congestion may in some cases actually increase system-wide emissions. The final part of my dissertation deals with an econometric issue that emerged from the empirical analysis of the drivers of wind power. I study the effect of the degree of censoring on random-effects Tobit estimates in finite sample with a particular focus on severe censoring, when the percentage of uncensored observations reaches 1 to 5 percent. The results show that the Tobit model performs well even at 5 percent uncensored observations with the bias in the Tobit estimates remaining at or below 5 percent. Under severe censoring (1 percent uncensored observations), large biases appear in the estimated standard errors and marginal effects. These are generally reduced as the sample size increases in both N and T.Item The Role of Prices and Information in Residential Energy Consumption and Investment Behavior(2012) Gans, Will; Alberini, Anna; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)Good stewardship of the planet's natural resources is the central challenge of our age, and energy generation and usage has become an important dimension of the current debate about sustainability. Americans spend approximately 5% of household income on energy, and over the last few decades--and as recently as with President Obama's stimulus package of 2009--many government policies have been targeted at residential energy efficiency. Improving energy efficiency would reduce total energy usage, emissions associated with generation of power from fossil fuels, and reliance on imports of such fuels. In this dissertation, I analyze three key aspects of residential energy behavior and their impact on policy. The first is elasticity of energy demand with respect to price. Earlier estimates span a wide range, due to the differing geographic coverage and time scales used in each study. In Chapter 3, I estimate a residential demand function for energy on a recent, nationwide panel of U.S. homes, and find higher price elasticities than previously documented. These results suggest that residential consumers are price responsive in their energy consumption. How they respond to price is the topic of Chapter 4, where I estimate a series of demand functions for energy efficiency improvements, and focus on the role of moving on energy investment. I find that households that move within 2 years are 20% less likely to invest in heaters than those who do not move, suggesting that homeowners do not believe that energy efficiency is capitalized into the value of the home. Requiring disclosure about the energy efficiency of a home during the sales process may remedy this disincentive. In Chapter 5, I use data from an original survey of households to examine how consumers value future savings from energy bills vis-à-vis money. I find that consumers apply a lower discount rate to energy savings than to money, suggesting that market failures, rather than consumer bias, may be responsible for a low rate of residential energy efficiency investment. Taken together, these findings contribute a greater understanding of residential energy behavior, and underscore the potential for intelligent policy to achieve energy efficiency goals.Item Modeling Household Energy Consumption and Adoption of Energy-efficient Technology Using Recent Micro-data(2011) Li, Jia; Just, Richard E; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)This study develops a unified technology choice and energy consumption model (a "discrete/continuous model") that can be applied to study household energy use behavior. The model, stemming from consumer theory, ensures modeling of consumer short-run energy demand and long-run capital investment decisions in a mutually consistent manner. The model adopts a second-order translog flexible functional form that allows considerable flexibility in the structure of consumer preferences and in the exploration of interplays among energy uses and between energy demand and appliance choices. This study extends the discrete/continuous model developed by Dubin and McFadden (1984) and is the first known application of the second-order translog flexible functional form in joint discrete/continuous modeling of consumer energy demand and appliance choice. Using a unique household-level dataset of 2,408 households served by the Pacific Gas and Electric Company in California, the model is applied to examine the roles of income, prices, household characteristics, and energy and environmental policy in household short-run energy use and long-run technology choices. The empirical analysis estimates a system of short-run household demand equations for electricity and natural gas and long-run technology choices with respect to clothes washing, water heating, space heating, and clothes drying. The results demonstrate the modeling framework is appropriate and robust in studying household energy use behavior. Findings from the empirical analysis have important implications for policy design. This study confirms two important market failures with respect to household energy technology choice behavior: the principal/agent problem and information imperfection. In the case of clothes washer choices, the voluntary, information-based Energy Star program emerges as the most significant factor influencing the adoption of energy-efficient front-loading clothes washers, followed by energy efficiency standards. Surprisingly, financial incentives, such as the popular rebate programs used to lower the initial capital cost of energy-efficient appliances, are found to be far less effective in influencing adoption of energy-efficient appliances. Furthermore, the study finds at the household level that the incentive for new technology adoption is greater under direct regulation than under market-based instruments, such as a carbon cap-and-trade program or emission taxes.