THE EFFECT OF MODELING SUBSTITUTE ACTIVITIES ON RECREATIONAL BENEFIT ESTIMATES

We use a nested-logit model of recreational fishing to examine how varying the range of fishing activities included in the choice set affects welfare measures. The basic analytical results are quite intuitive: welfare calculations with a site-choice travel cost model that omits relevant substitute activities will tend to understate gains and to overstate losses for a fixed sample and a fixed set of model parameters. The magnitude of bias in any particular case will be directly related to the degree of substitution between the omitted activities and the activities included in the model. In our empirical application, we examine changes in the quality of trout and salmon fishing on the Great Lakes and on anadromous runs. For most of the scenarios examined, we find that models that only include Great Lakes and andromous fishing activities, to the exclusion of inland fishing activities, yield welfare results that are relatively similar to those of models that include the full range of activities, provided care is taken to extrapolate the results to a common population. The results are due to the relatively low predicted rates of substitution between inland and Great Lakes fishing activities. We derive implications for benefits transfer procedures.Resource /Energy Economics and Policy,

Are OSHA Health Inspections Effective? A Longitudinal Study in the Manufacturing Sector

We examine the impact of OSHA health inspections on compliance with agency regulations in the manufacturing sector, with a unique plant-level dataset of inspection and compliance behavior during 1972-1983, the first twelve years of OSHA enforcement operations. Two major findings are robust across the range of linear and count models estimated in the paper: (1) the number of citations and the number of violations of worker exposure restrictions decrease with additional health inspections in manufacturing plants; and (2) the first health inspection has the strongest impact. The results suggest that prior research focusing on the limited impact of OSHA safety regulations may under-estimate OSHA's total contribution to reducing workplace risks.

The Social Cost of Uniform Regulatory Standards

Uniform regulatory standards, frequently employed in environmental health and safety, are widely criticized as inefficient on the grounds that all firms are required to comply, regardless of compliance cost. Since firms will self-select to comply only if their compliance costs exceed the expected penalty for non-compliance, the inefficiency could be avoided by an enforcement policy chosen to maximize social welfare. But we argue that the enforcement agency goal is likely to place a larger weight on the benefits of compliance than on the costs of compliance, which will produce distortions. We show that the legislature can reduce the resulting distortions by limiting the enforcement agency budget and by permitting the agency partially to self-finance, by retaining a portion of its noncompliance penalties. Finally, if the enforcement agency has a good "signal" of firms' compliance costs, the distortions can be made very small by appropriate choice of the enforcement budget.Center for Research on Economic and Social Theory, Department of Economics, University of Michiganhttp://deepblue.lib.umich.edu/bitstream/2027.42/100803/1/ECON263.pd

Farm Household Well-Being: Comparing Consumption- and Income-Based Measures

Household economic well-being can be gauged by the financial resources (income/ wealth) available to the household or by the standard of living enjoyed by household members (consumption). Based on responses to USDA’s annual Agricultural Resource Management Survey (ARMS), a joint effort by the Economic Research Service (ERS) and the USDA National Agricultural Statistics Service, ERS has long published estimates of farm household income and wealth. This report presents, for the first time, estimates of consumption-based measures of well-being for farm households based on new questions in ARMS. The consumption measure provides a different perspective from income or wealth on farm households’ well-being relative to that of all U.S. households.household consumption, household income, household well-being measures, farm households, self-employed households, permanent income, permanent income hypothesis., Agricultural and Food Policy, Consumer/Household Economics, Food Consumption/Nutrition/Food Safety,

Economic Well-Being of Farm Households

Farm subsidy programs were introduced in the 1930s largely due to concern for chronically low, and highly variable, incomes of US farm households. Today commodity-based support programs are still prominent, though income and wealth of the average farm household now exceed that of the average nonfarm households - by a large margin. Farm income continues to be highly variable, but the small set of farm households most at risk for income variability - because farm income represents more than one-third of household income - are those operating large farms. And they have substantial net worth, which cushions uncertain farm income.Farm households, household income, household wealth, household net worth, living expenses, joint income-wealth indicator, economic well-being, financial well-being, Off-farm employment, Income variability, ERS, USDA, Consumer/Household Economics,

Longitudinal Patterns of Compliance with OSHA Health and Safety Regulations in the Manufacturing Sector

We examine the impact of OSHA enforcement on company compliance with agency regulations in the manufacturing sector, with a unique plant-level data set of inspection and compliance behavior during 1972-1983, the first twelve years of the agency operation. The analysis suggests that, for an individual inspected plant, the average effect of OSHA inspections during this period was to reduce expected citations by 3.0 or by .36 s.d. The total effect on expected citations of additional inspections can be decomposed into two parts; evaluated at the mean of the sample, 59 percent of the total change in citations occurred due to an increase in the compliance rate; 41 percent was due to a reduction in citations among continuing violators.

Health Status and Health Care Access of Farm and Rural Populations

Rural residents have higher rates of age-adjusted mortality, disability, and chronic disease than their urban counterparts, though mortality and disability rates vary more by region than by metro status. Contributing negatively to the health status of rural residents are their lower socioeconomic status, higher incidence of both smoking and obesity, and lower levels of physical activity. Contributing negatively to the health status of farmers are the high risks from workplace hazards, which also affect other members of farm families who live on the premises and often share in the work; contributing positively are farmers’ higher socioeconomic status, lower incidence of smoking, and more active lifestyle. Both farm and rural populations experience lower access to health care along the dimensions of affordability, proximity, and quality, compared with their nonfarm and urban counterparts.Health Economics and Policy, agriculture safety and health, electronic health records, farmer health, health, health care access, health care affordability, health care quality, health disparities, health IT, health status, mortality, rural health, telehealth, uninsured,

ECONOMICS OF SEQUESTERING CARBON IN THE U.S. AGRICULTURAL SECTOR

Atmospheric concentrations of greenhouse gases can be reduced by withdrawing carbon from the atmosphere and sequestering it in soils and biomass. This report analyzes the performance of alternative incentive designs and payment levels if farmers were paid to adopt land uses and management practices that raise soil carbon levels. At payment levels below $10 per metric ton for permanently sequestered carbon, analysis suggests landowners would find it more cost effective to adopt changes in rotations and tillage practices. At higher payment levels, afforestation dominates sequestration activities, mostly through conversion of pastureland. Across payment levels, the economic potential to sequester carbon is much lower than the technical potential reported in soil science studies. The most cost-effective payment design adjusts payment levels to account both for the length of time farmers are willing to commit to sequestration activities and for net sequestration. A 50-percent cost-share for cropland conversion to forestry or grasslands would increase sequestration at low carbon payment levels but not at high payment levels.Carbon sequestration, greenhouse gas mitigation, afforestation, conservation tillage, no-till, incentive design, leakage, carbon stock, permanence, Environmental Economics and Policy,

Tradable Pollution Permits and the Regulatory Game

This paper analyzes polluters\u27 incentives to move from a traditional command and control (CAC) environmental regulatory regime to a tradable permits (TPP) regime. Existing work in environmental economics does not model how firms contest and bargain over actual regulatory implementation in CAC regimes, and therefore fail to compare TPP regimes with any CAC regime that is actually observed. This paper models CAC environmental regulation as a bargaining game over pollution entitlements. Using a reduced form model of the regulatory contest, it shows that CAC regulatory bargaining likely generates a regulatory status quo under which firms with the highest compliance costs bargain for the smallest pollution reductions, or even no reduction at all. As for a tradable permits regime, it is shown that all firms are better off under such a regime than they would be under an idealized CAC regime that set and enforced a uniform pollution standard, but permit sellers (low compliance cost firms) may actually be better off under a TPP regime with relaxed aggregate pollution levels. Most importantly, because high cost firms (or facilities) are the most weakly regulated in the equilibrium under negotiated or bargained CAC regimes, they may be net losers in a proposed move to a TPP regime. When equilibrium costs under a TPP regime are compared with equilibrium costs under a status quo CAC regime, several otherwise paradoxical aspects of firm attitudes toward TPP type reforms can be explained. In particular, the otherwise paradoxical pattern of allowances awarded under Phase II of the 1990 Clean Air Act\u27s acid rain program, a pattern tending to favor (in Phase II) cleaner, newer generating units, is explained by the fact that under the status quo regime, a kind of bargained CAC, it was the newer cleaner units that were regulated, and which therefore had higher marginal control costs than did the largely unregulated older, plants. As a normative matter, the analysis here implies that the proper baseline for evaluating TPP regimes such as those contained in the Bush Administration\u27s recent Clear Skies initiative is not idealized, but nonexistent CAC regulatory outcomes, but rather the outcomes that have resulted from the bargaining game set up by CAC laws and regulations