Findings

Cleaned out

Kevin Lewis

September 27, 2017

Environmental Hazards and Mortgage Credit Risk: Evidence from Texas Pipeline Incidents
Minhong Xu & Yilan Xu
Real Estate Economics, forthcoming

Abstract:
This study examines the effects of pipeline hazards on credit access using evidence from the 2005–2011 home mortgage loans in Texas. Difference-in-difference analyses show a permanently lower origination rate by 1.9% in the pipeline-present areas compared to the pipeline-free areas, which was further enlarged by 1.8% whenever pipeline incidents happened. Evidence suggests that the permanent difference in credit access reflects lenders’ concerns about collateral value and borrowers’ repayment ability. The elevated post-incident risk perceptions indicate lenders’ aversion to environmental liabilities. Lenders’ risk management strategies differed by borrowers’ income and evolved with the tightening of the securitization market.


The External Costs of Transporting Petroleum Products by Pipelines and Rail: Evidence From Shipments of Crude Oil from North Dakota
Karen Clay et al.
NBER Working Paper, September 2017

Abstract:
This paper constructs new estimates of the air pollution and greenhouse gas costs from long-distance movement of petroleum products by rail and pipelines. While crude oil transportation has generated intense policy debate about rail and pipeline spills and accidents, important externalities – air pollution and greenhouse gas costs – have been largely overlooked. Using data for crude oil transported out of North Dakota in 2014, this paper finds that air pollution and greenhouse gas costs are nearly twice as large for rail as for pipelines. Moreover, our estimates of air pollution and greenhouse gas costs are much larger than estimates of spill and accidents costs. In particular, they are more than twice as big for rail and more than eight times as big for pipelines. Our findings indicate that the policy debate surrounding crude oil transportation has put too much relative weight on accidents and spills, while overlooking a far more serious source of external cost: air pollution and greenhouse gas emissions.


The costs of induced seismicity: A hedonic analysis
Neil Metz, Travis Roach & Jordan Williams
Economics Letters, November 2017, Pages 86–90

Abstract:
New developments in drilling technology and hydraulic fracturing have brought unprecedented change to energy markets domestically and internationally. Unintended effects of this extraction technique have been felt, quite literally, due to induced seismicity from wastewater injection. This research measures the costs of induced seismicity through changes in home prices using a hedonic price analysis within a differences-in-differences framework. We find the revealed cost to be between 3.15%–4.7% of home values, up to a $6660 reduction at the average.


Lightning enhancement over major oceanic shipping lanes
Joel Thornton et al.
Geophysical Research Letters, 16 September 2017, Pages 9102–9111

Abstract:
Using twelve years of high resolution global lightning stroke data from the World Wide Lightning Location Network (WWLLN), we show that lightning density is enhanced by up to a factor of two directly over shipping lanes in the northeastern Indian Ocean and the South China Sea as compared to adjacent areas with similar climatological characteristics. The lightning enhancement is most prominent during the convectively active season, November-April for the Indian Ocean and April-December in the South China Sea, and has been detectable from at least 2005 to the present. We hypothesize that emissions of aerosol particles and precursors by maritime vessel traffic lead to a microphysical enhancement of convection and storm electrification in the region of the shipping lanes. These persistent localized anthropogenic perturbations to otherwise clean regions are a unique opportunity to more thoroughly understand the sensitivity of maritime deep convection and lightning to aerosol particles.


Consumers' Response to State Energy Efficient Appliance Rebate Programs
Sébastien Houde & Joseph Aldy
American Economic Journal: Economic Policy, forthcoming

Abstract:
Through an evaluation of the 2009 Recovery Act's State Energy Efficient Appliance Rebate Program, this paper examines consumers' response to energy efficiency rebates. The analysis shows that 70 percent of consumers claiming a rebate were inframarginal and an additional 15 percent–20 percent of consumers simply delayed their purchases by a few weeks. Consumers responded to rebates by upgrading to higher quality, but less energy-efficient models. Overall the impact of the program on long-term energy demand is likely to be small. Measures of government expenditure per unit of energy saved are an order of magnitude higher than estimates for other energy efficiency programs.


What Lies Beneath: Pipeline Awareness and Aversion
Evan Herrnstadt & Richard Sweeney
NBER Working Paper, September 2017

Abstract:
Stated safety concerns are a major impediment to making necessary expansions to the natural gas pipeline network. While revealed willingness to pay to avoid existing natural gas pipelines appears small, it is difficult to know if this reflects true ambivalence or a lack of salience and awareness. In this paper, we test this latter hypothesis by studying how house prices responded to a deadly 2010 pipeline explosion in San Bruno, CA, which shocked both attention and information. Using multiple identification strategies, we fail to find any evidence of a meaningful shift in the hedonic price gradient around pipelines following these events. We conclude with a discussion of how this result relates to latent, fully informed preferences, as well as the implications for future pipeline expansions.


The Impact Of Farm Animal Housing Restrictions on Egg Prices, Consumer Welfare, and Production in California
Conner Mullally & Jayson Lusk
American Journal of Agricultural Economics, forthcoming

Abstract:
New animal welfare policies on the horizon in many U.S. states have prompted debates about the cost of achieving happier hens and hogs. A recent policy change in California offers a unique opportunity to measure the economic repercussions of minimum space requirements for egg-laying hens. Using forecasting methods and structural break tests as applied to sixteen years of monthly data on egg production and input prices, we find that by July 2016, both egg production and the number of egg-laying hens were about 35% lower than they would have been in the absence of the new regulations. Out-of-state eggs were able to compensate for falling California production until around the time the new rules were implemented, at which point imports of eggs into California fell. For consumers, we estimate price impacts using panel structural break tests and difference-in-differences models as applied to five years of scanner data from the retail market for shell eggs in three California markets and three control markets. We find that the average price paid per dozen eggs was about 22% higher from December 2014 through September 2016 than it would have been in the absence of the hen housing restrictions. The price impact fell over time, from an initial impact of about 33% per dozen to about 9% over the last six months of the observed time horizon. These price increases correspond to welfare losses of at least $117 million for the three California markets over the observed time horizon. Our results suggest that because of the policy change, California consumers can expect to experience annual welfare losses of at least $25 million in future years from higher retail egg prices alone.


Tell Me Something I Don't Already Know: Informedness and the Impact of Information Programs
David Byrne, Andrea La Nauze & Leslie Martin
Review of Economics and Statistics, forthcoming

Abstract:
We document how imperfect information generates heterogeneous effects in information treatments with personalized high-frequency feedback and peer comparisons. In our field experiment in retail electricity, we find that high and low energy users symmetrically underestimate and overestimate their relative energy use pre-treatment. Responses to personalized feedback, however, are asymmetric. Households that overestimate their relative use and low users both respond by consuming more. These boomerang effects provide evidence that peer-comparison information programs, even those coupled with normative comparisons, are not guaranteed to lead to increases in prosocial behavior.


The Expansion of Modern Agriculture and Global Biodiversity Decline: An Integrated Assessment
Bruno Lanz, Simon Dietz & Tim Swanson
Ecological Economics, February 2018, Pages 260–277

Abstract:
The world is banking on a major increase in food production, if the dietary needs and food preferences of an increasing, and increasingly rich, population are to be met. This requires the further expansion of modern agriculture, but modern agriculture rests on a small number of highly productive crops and its expansion has led to a significant loss of global biodiversity. Ecologists have shown that biodiversity loss results in lower plant productivity, while agricultural economists have linked biodiversity loss on farms with increasing variability of crop yields, and sometimes lower mean yields. In this paper we consider the macro-economic consequences of the continued expansion of particular forms of intensive, modern agriculture, with a focus on how the loss of biodiversity affects food production. We employ a quantitative, structurally estimated model of the global economy, which jointly determines economic growth, population and food demand, agricultural innovations and land conversion. We show that even small effects of agricultural expansion on productivity via biodiversity loss might be sufficient to warrant a moratorium on further land conversion.


Waiting can be an optimal conservation strategy, even in a crisis discipline
Gwenllian Iacona, Hugh Possingham & Michael Bode
Proceedings of the National Academy of Sciences, 26 September 2017, Pages 10497–10502

Abstract:
Biodiversity conservation projects confront immediate and escalating threats with limited funding. Conservation theory suggests that the best response to the species extinction crisis is to spend money as soon as it becomes available, and this is often an explicit constraint placed on funding. We use a general dynamic model of a conservation landscape to show that this decision to “front-load” project spending can be suboptimal if a delay allows managers to use resources more strategically. Our model demonstrates the existence of temporal efficiencies in conservation management, which parallel the spatial efficiencies identified by systematic conservation planning. The optimal timing of decisions balances the rate of biodiversity decline (e.g., the relaxation of extinction debts, or the progress of climate change) against the rate at which spending appreciates in value (e.g., through interest, learning, or capacity building). We contrast the benefits of acting and waiting in two ecosystems where restoration can mitigate forest bird extinction debts: South Australia’s Mount Lofty Ranges and Paraguay’s Atlantic Forest. In both cases, conservation outcomes cannot be maximized by front-loading spending, and the optimal solution recommends substantial delays before managers undertake conservation actions. Surprisingly, these delays allow superior conservation benefits to be achieved, in less time than front-loading. Our analyses provide an intuitive and mechanistic rationale for strategic delay, which contrasts with the orthodoxy of front-loaded spending for conservation actions. Our results illustrate the conservation efficiencies that could be achieved if decision makers choose when to spend their limited resources, as opposed to just where to spend them.


From Lead Exposure in Early Childhood to Adolescent Health: A Chicago Birth Cohort
Alix Winter & Robert Sampson
American Journal of Public Health, September 2017, Pages 1496-1501

Methods: We followed a random sample of birth cohort members from the Project on Human Development in Chicago Neighborhoods, recruited in 1995 to 1997, to age 17 years and matched to childhood blood test results from the Department of Public Health. We used ordinary least squares regression, coarsened exact matching, and instrumental variables to assess the relationship between average blood lead levels in childhood and impulsivity, anxiety or depression, and body mass index in adolescence. All models adjusted for relevant individual, household, and neighborhood characteristics.

Results: After adjustment, a 1 microgram per deciliter increase in average childhood blood lead level significantly predicts 0.06 (95% confidence interval [CI] = 0.01, 0.12) and 0.09 (95% CI = 0.03, 0.16) SD increases and a 0.37 (95% CI = 0.11, 0.64) point increase in adolescent impulsivity, anxiety or depression, and body mass index, respectively, following ordinary least squares regression. Results following matching and instrumental variable strategies are very similar.


Indigenous land rights and deforestation: Evidence from the Brazilian Amazon
Ariel BenYishay et al.
Journal of Environmental Economics and Management, forthcoming

Abstract:
Concerns over the expropriation of and encroachment on indigenous communities' lands have led to greater formalization of these communities' rights in a number of developing countries. We study whether formalization of indigenous communities' land rights affects the rate of deforestation in both the short and medium terms. Beginning in 1995, the Government of Brazil formalized the rights of several hundred indigenous communities whose lands cover more than 40 million hectares in the Amazon region and provided support for these rights’ enforcement. We study the program's impacts using a long time-series of satellite-based forest cover data. Using both plausibly exogenous variation in the timing of formalization and matched samples of treated and comparison communities, we find no effect of these protections on satellite-based greenness measures. This is true even for communities that received support for surveillance and enforcement of these rights. Notably, we observe low counterfactual rates of deforestation on communities' lands between 1982 and 2010, suggesting that indigenous land rights programs should not uniformly be justified on the basis of their forest protection, at least in the medium term.


The Price Elasticity of U.S. Shale Oil Reserves
James Smith & Thomas Lee
Energy Economics, September 2017, Pages 121-135

Abstract:
We formulate a model of shale oil development that identifies how much of the U.S. resource base is likely to be economically viable at various price levels, and what share of potential drilling sites are likely to be exploited. The analysis is driven by the lognormal variability in productivity of individual wells. We find the volume of reserves to be highly inelastic with respect to price. The number of viable drilling sites is less inelastic, which may explain why reserve additions and production fell much less than drilling activity during the recent industry slump.


The U.S. Shale Oil Boom, the Oil Export Ban, and the Economy: A General Equilibrium Analysis
Nida Çakir Melek, Michael Plante & Mine Yücel
NBER Working Paper, September 2017

Abstract:
This paper examines the effects of the U.S. shale oil boom in a two-country DSGE model where countries produce crude oil, refined oil products, and a non-oil good. The model incorporates different types of crude oil that are imperfect substitutes for each other as inputs into the refining sector. The model is calibrated to match oil market and macroeconomic data for the U.S. and the rest of the world (ROW). We investigate the implications of a significant increase in U.S. light crude oil production similar to the shale oil boom. Consistent with the data, our model predicts that light oil prices decline, U.S. imports of light oil fall dramatically, and light oil crowds out the use of medium crude by U.S. refiners. In addition, fuel prices fall and U.S. GDP rises. We then use our model to examine the potential implications of the former U.S. crude oil export ban. The model predicts that the ban was a binding constraint in 2013 through 2015. We find that the distortions introduced by the policy are greatest in the refining sector. Light oil prices become artificially low in the U.S., and U.S. refineries produce inefficiently high amount of refined products, but the impact on refined product prices and GDP are negligible.


Air-quality implications of widespread adoption of cool roofs on ozone and particulate matter in southern California
Scott Epstein et al.
Proceedings of the National Academy of Sciences, 22 August 2017, Pages 8991–8996

Abstract:
The installation of roofing materials with increased solar reflectance (i.e., “cool roofs”) can mitigate the urban heat island effect and reduce energy use. In addition, meteorological changes, along with the possibility of enhanced UV reflection from these surfaces, can have complex impacts on ozone and PM2.5 concentrations. We aim to evaluate the air-quality impacts of widespread cool-roof installations prescribed by California’s Title 24 building energy efficiency standards within the heavily populated and polluted South Coast Air Basin (SoCAB). Development of a comprehensive rooftop area database and evaluation of spectral reflectance measurements of roofing materials allows us to project potential future changes in solar and UV reflectance for simulations using the Weather Research Forecast and Community Multiscale Air Quality (CMAQ) models. 2012 meteorological simulations indicate a decrease in daily maximum temperatures, daily maximum boundary layer heights, and ventilation coefficients throughout the SoCAB upon widespread installation of cool roofs. CMAQ simulations show significant increases in PM2.5 concentrations and policy-relevant design values. Changes in 8-h ozone concentrations depend on the potential change in UV reflectance, ranging from a decrease in population-weighted concentrations when UV reflectance remains unchanged to an increase when changes in UV reflectance are at an upper bound. However, 8-h policy-relevant ozone design values increase in all cases. Although the other benefits of cool roofs could outweigh small air-quality penalties, UV reflectance standards for cool roofing materials could mitigate these negative consequences. Results of this study motivate the careful consideration of future rooftop and pavement solar reflectance modification policies.


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