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This dissertation presents a three-part study in modern empirical environmental economics. In these three studies, I focus on five core economic issues—equity, incentives, environmental quality, consumer behavior, and causality—and ask what environmental economics can teach us about three common topics: energy consumption, cannabis legalization, and pesticide application. The first chapter examines how residential natural gas consumers respond to changes in the price of natural gas. With 70 million consumers, residential natural gas has grown to a first-order policy issue. This first chapter provides the first causally identified, microdata-based estimates of residential natural-gas demand elasticities using a panel of 300 million bills in California. To overcome multiple sources of endogeneity, we employ a two-pronged strategy: we interact (1) a spatial discontinuity along the service areas of two major natural-gas utilities with (2) an instrumental-variables strategy using the utilities' differing rules/behaviors for internalizing upstream spot-market prices. We then demonstrate substantial seasonal and income-based heterogeneities underly this elasticity. These heterogeneities suggest unexplored policies that are potentially efficiency-enhancing and pro-poor. The second chapter explores what may be unintended—or unconsidered—results of cannabis legalization. Cannabis legalization advocates often argue that cannabis legalization offers the potential to reduce the private and social costs related to criminalization and incarceration—particularly for marginalized populations. While this assertion is theoretically plausible, it boils down to an empirically testable hypothesis that remains untested: does legalizing a previously illegal substance (cannabis) reduce arrests, citations, and general law-enforcement contact? The second chapter of this dissertation provides the first causal evidence that cannabis legalization need not necessarily reduce criminalization—and under the right circumstances, may in fact increase police incidents/arrests for both cannabis products and non-cannabis drugs. First, I present a theoretical model of police effort and drug consumption that demonstrates the importance of substitution and incentives for this hypothesis. I then empirically show that before legalization, drug-incident trends in Denver, Colorado matched trends in many other US cities. However, following cannabis legalization in Colorado, drug incidents spike sharply in Denver, while trends in comparison cities (unaffected by Colorado's legalization) remain stable. This spike in drug-related police incidents occurs both for cannabis and non-cannabis drugs. Synthetic-control and difference-in-differences empirical designs corroborate the size and significance of this empirical observation, estimating that Colorado's legalization of recreational cannabis nearly doubled police-involved drug incidents in Denver. This chapter's results present important lessons for evaluating the effects and equity of policies ranging legalization to criminal prosecution to policing. Finally, the third chapter investigates the roles pesticides play in local air quality. Many policymakers, public-health advocates, and citizen groups question whether current pesticide regulations properly equate the marginal social costs of pesticide applications to their marginal social benefits—with particular concern for negative health effects stemming from pesticide exposure. Additionally, recent research and policies in public health, epidemiology, and economics emphasize how fine particulate matter (PM2.5) concentrations harm humans through increased mortality, morbidity, mental health issues, and a host of socioeconomic outcomes. This chapter presents the first empirical evidence that aerially applied pesticides increase local PM2.5 concentrations. To causally estimate this effect, I combine the universe of aerial pesticide applications in the five southern counties of California's San Joaquin Valley (1.8M reports) with the U.S. EPA's PM2.5 monitoring network—exploiting spatiotemporal variation in aerial pesticide applications and variation in local wind patterns. I find significant evidence that (upwind) aerial pesticide applications within 1.5km increase local PM2.5 concentrations. The magnitudes of the point estimates suggest that the top decile of aerial applications may sufficiently increase local PM2.5 to warrant concern for human health. Jointly, the three parts of this dissertation aim to carefully administer causally minded econometrics, in conjunction with environmental economic theory, to answer unresolved, policy-relevant questions.
Abstract: Health and environment have recently been active research areas in development economics. However, estimating impacts on development has been hampered by concerns that there may be confounding variables that bias the estimates. My dissertation evaluates a credible relationship between the two by identifying an empirical context in which the roles of confounding variables are mitigated. The first essay quantifies the impacts of air pollution and related regulations on infant mortality in China. I exploit plausibly exogenous variations in air quality generated by environmental regulations since 1995. The results suggest that the regulations led to significant reductions in air pollution and infant mortality rate (IMR). I estimate that 25,400 fewer infants died per year than would have died in the absence of the regulations, corresponding to about a 21 percent decline in IMR. The instrumental variable estimates indicate that a one percent reduction in total suspended particulates results in a 0.95 percent reduction in IMR, whereas a one percent reduction in sulfur dioxide results in a 0.82 percent reduction in IMR. The estimated impact of a unit change in TSP is of similar magnitude to that found in the U.S., but the elasticity is substantially higher in China, highlighting the greater benefits associated with regulations when pollution is already quite high. The second essay quantifies the returns of health infrastructure to child health status, as measured by weight-for-age z-scores. By exploiting plausibly exogenous changes in access to health services induced by the health policy in South Africa after the end of apartheid, I show that gaining access to health institutions improves nutritional status of boys but not of girls among newly born babies and children with low health status. The third essay investigates whether improved access to health services leads to better educational achievements. The health policy I examine in the second chapter provides a rare opportunity to credibly evaluate a relationship. The results indicate that access to health services has little impact on educational outcomes, except that boys who gained substantial increases in health access at the time of enrollment are likely to start school earlier.
This collection of specially commissioned papers pays tribute to Karl-Gustaf Lofgren's significant and diverse contribution to theoretical and empirical research within the field of environmental and resource economics over the past two decades. A number of distinguished scholars examine a broad range of topics including sustainability, risk and uncertainty, demand theory and issues related to public goods. The book also contains analyses of more specific resource problems concerning fisheries, forestry management, wildlife and pollution. Together, the seventeen chapters provide an innovative and cutting-edge analysis of a smorgasbord of both old and new environmental and resource problems, including, amongst others: local public goods and income heterogeneity self-selection and the value of lives saved international fisheries agreements salmon and hydropower discrete versus continuous harvesting timber supply voluntary road pricing economic impacts of environmental regulations in California. Academics, researchers and students within the fields of environmental, resource and public economics will find this book to be a fascinating read.
"Life satisfaction has been widely used in recent years for evaluating the welfare impacts ofthe environment. In Chapters 1 and 2, the effect of a number of environmental factors on well-being is studied. In Chapter 1, a set of repeated cross-sectional surveys is combined with high-resolution pollution and weather data. The respondents' level of life satisfaction is modeled as a function of their socioeconomic characteristics and income as well as the weather and air pollution on the day of the survey interview. In order to overcome endogeneity problems, a set of high-resolution geographic fixed effects is included in all specifications. The empirical analysis in this chapter suggests that even after controlling for seasonal and local fixed effects, higher air pollution significantly reduces life satisfaction. The adverse effect of transient increases in air pollution is greater on individuals with poor health status. Estimating the average compensating differential between income and air pollution shows that the value of improving air quality by one-half standard deviation throughout the year is about 4.4% of the average annual income of Canadians. The empirical analysis in Chapter 2 is on two major health surveys in Canada, namely the Canadian Community Health Survey (CCHS) and the National Population Health Survey (NPHS). In this chapter, it is shown that, after controlling for individuals' socioeconomic characteristics, temporal weather variations have a statistically significant effect on satisfaction with life. This effect is identified in a number of alternative specifications. Women and individuals with poor health conditions are more affected by weather conditions. Although statistically significant, the effect of weather on life satisfaction is small compared to the major socioeconomic determinants of well-being. Confirming the results of past studies, the analysis of the repeated cross-sectional data shows the impact of long-term climate variables on life satisfaction. Most studies on the dynamic game of exhaustible resources rely on analytical solutions to find the equilibrium. In Chapter 3, numerical approaches to finding the feedback and the open-loop equilibriums are applied to examine the robustness of the results of a number of studies that were limited to analytical solutions. In this chapter, first the analysis in Salo and Tahvonen (2001), which assumes an economic depletion of resources, is extended to the case of an iso-elastic demand combined with reserve-dependent costs by applying two different numerical methods. In addition, the open-loop equilibrium is derived numerically and the results are compared with those of the feedback equilibrium. We examine separately the cases with identical costs and cost asymmetry among producers. Next, the study of Benchekroun and Van Long (2006) on the impact of an increase in resource stock is extended by considering production costs. It is shown that, with non-zero costs, the high-cost firms might face a decrease in profit as a result of a resource increase." --
This book honours Partha Dasgupta, and the field he helped establish; environment and development economics. It concerns the relationship between social systems (to include families, local communities, national economies, and the world as a whole) and natural systems (critical ecosystems, forests, water resources, mineral deposits, pollution, fisheries, and the Earth's climate). Above all, it concerns the poverty-environment nexus: the complex pathways by which people become or remain poor, and resources become or remain overexploited. With contributions by some of the world's leading economists, including five recipients of the Nobel Prize in Economics, in addition to scholars based in developing countries, this volume offers a unique perspective on the environmental issues that matter most to developing countries.