Two Empirical Essays in Environmental and Urban Economics

Abstract

Externalities associated with automobile use have long been an important topic in environmental and urban economics. Air pollution and traffic congestion constitute two main external costs of driving (Parry, Walls and Harrington 2007). Because pricing approaches such as higher fuel taxes and road pricing are unpopular, various travel demand management (TDM) programs aiming to control vehicle travel demand through non-pricing approaches have been adopted by government agencies across the country. These programs provide public information, use persuasion, subsidize transit riding, and promote carpooling and telecommuting. However, whether these programs generate incentives for people to reduce driving remains an open question.

I address this question with respect to two types of TDM strategies: telecommuting and public information provision. The first essay examines whether telecommuting opportunities lead employees to have longer commute lengths. Because telecommuting is often jointly chosen with commuting patterns and no single dataset contains sufficient information to solve the endogeneity problem, I use a two-sample instrumental variables technique to estimate the causal impact of telecommuting on commute length. The data for the project are assembled from the May 2001 Current Population Survey (CPS) and the 2000 Census 5% Public Use Micro-data Series (PUMS). The results suggest that telecommuting increases married female workers' one-way commute time by 9 - 12 minutes, but the effect on male workers' commute length is not precisely estimated. Although telecommuting may still cut down total commute miles, it is less effective than expected, in particular for married women.

The second essay assesses the effectiveness of the Air Quality Action Days program in the Baltimore metropolitan area in getting cars off the road on high ozone days. The program asks people to reduce vehicle trips on code red days when the ozone level is forecast to exceed the EPA's standard. I look at traffic volumes on highways in the Baltimore area, and using a regression discontinuity design, measure the extent that traffic is lower due to the announcement. I find that the program generally has little effect except that it reduces morning inbound traffic by 4-5 percent. Evening outbound traffic declines correspondingly.