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Document Type

Open Access Dissertation

Degree Name

Doctor of Philosophy (PhD)

Degree Program

Resource Economics

Year Degree Awarded

2018

Month Degree Awarded

September

First Advisor

Jamie Mullins

Abstract

Establishing effective environmental policies is of considerable importance

around the world and becoming more crucial as human activities continue to change and

impact natural resources. The design of effective policies requires knowledge of the

mechanisms through which markets and individual behavior respond to environmental

risks. The following research focuses on the empirical estimation of such responses in

the presence of environmental risk to inform policy decisions. I apply econometric

methods to a variety of environmental issues, including flooding, environmental

disasters, and air pollution. My findings provide important information regarding the

setting of future policies related to each issue.

In the first chapter, “Estimating the Economic Impact of Stormwater runoff in the

Allen Creek Watershed,” written with Jeffrey Wagner, Karl Korfmacher, Daniel Lass and

Bríd Gleeson Hanna, we develop an economic model for stormwater runoff control to

quantify one important part of the tradeoff between the desirability of development

versus the consequential environmental challenges and economic costs associated with

increased flooding risk. Developing a theoretical model and illustrating its application in

the Allen Creek watershed, we account for heterogeneity in each parcel-level generation

of stormwater runoff to estimate the marginal implicit price of additional stormwater

runoff due to development on downstream property values. We translate this value to a

marginal damage figure specific to our study area and compare our results with a relevant

abatement cost estimate. Our comparison suggests a general result that policies

encouraging upstream abatement measures, such as retention ponds, are likely to be

economically efficient.

The second chapter, “Information and Environmental Disasters: Valuing Public

Perception Regarding the Deepwater Horizon Oil Spill,” written with Patrick Walsh,

quantifies the value of risk-signaling information in the context of shoreline oil wash-ups

from the Deepwater Horizon (DWH) oil spill. We analyze sale price and volume

responses in Hillsborough County, Florida, which ultimately experienced no wash-ups.

This chapter provides insight on the types of information that are salient for the

capitalization of perceived risk into home values and highlights an additional avenue for

economic losses from environmental catastrophes that has often been overlooked. Our

results suggest that the net impact of the heightened risk of oil wash-ups on coastal

homes was a ~4% reduction in sale prices between two and eight months after the DWH

oil spill, with the largest impact of a ~7% reduction in prices occurring in August and

September 2010. The timing of these price impacts suggests that specifically relevant

information regarding risk, coming from a source of authority is critical in driving risk

perceptions and ultimate price effects in the real estate market. Finally, our results

suggest a total capitalized loss of $4.5 million which highlights the importance of

considering a more comprehensive definition of damages, specifically accounting for

losses associated with public perception of risks, when compensating states and local

governments, as well as citizens, for losses due to environmental disasters.

In the final chapter, “Quantifying the Health Effects of Information on Pollution

Levels in Chile,” written with Jamie Mullins, we analyze a policy implemented by the

Government of Chile that institutes temporary measures to reduce negative impacts of

high levels of air pollution in the short run through both emissions restrictions and public

information campaigns. This policy includes public announcement of days for which

pollution is projected to exceed threshold levels, deemed ‘Episodes’. As Episodes serve

to both reduce air pollution and inform the public, this chapter separately identifies the

mortality reducing effects of Episode announcements acting through the channel of

information and avoidance behavior from the total effect of Episode announcements,

which includes effects attributable to improved air quality. We find that, holding PM10

constant, the estimated impacts of the Episodes’ informational effects have magnitudes

comparable to the estimated total effects of Episode announcements on the day of and

two days after an Episode announcement, indicating that information is playing a critical

role in the reduction of mortality following Episode announcements. Our results suggest

that little of the observed reduction in mortality following Episodes is attributable to

lower ambient air pollution in the most immediate days following an announcement,

despite the fact that air pollution does improve significantly following Episode

announcements. These results are important for informing the implementation of short term

approaches for addressing spikes in air pollution in other major urban centers.

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