THE VALUE OF WATER AS AN URBAN CLUB GOOD: A MATCHING APPROACH TO HOA-PROVIDED LAKES

Urban lakes located in arid environments require large quantities of water to maintain their water levels, with much of this water associated with high opportunity costs. Many of these lakes are manmade and provide various amenities to surrounding residents. In this paper we use matching techniques to recover the average capitalized value of lakes to surrounding communities and differentiate between community members and adjacent households to recover heterogeneous treatment effects. Importantly, we consider the role of both unobservable and observable features of matching to recover heterogeneous capitalization across lake communities. Our results suggest that the capitalized value of lakes to community residents is highly heterogeneous and ranges from an annual value of -$29 to +$20 per homeowner per acre foot of water. These results suggest that small changes in water pricing could remove the surplus benefits of lakes to community residents.Matching, Treatment effects, Urban lakes, Capitalization, Environmental Economics and Policy, Political Economy, Resource /Energy Economics and Policy,

Is There Evidence that Legislative Ambition Matches Development? Evaluating the Factors Influencing Wind Energy Development

Resource /Energy Economics and Policy,

Estimating the Price Elasticity of Demand for Water with Quasi Experimental Methods

There is a growing recognition in both the professional and popular literatures that water scarcity is a key policy issue that is especially important in arid, urban settings with the prospects for shortfalls in water availability due to the effects of climate change. Those evaluating these types of water problems usually conclude prices must be reformed so that incentives facing water users change to reflect this scarcity. Demand functions provide the basic economic relationships required to understand how water use will respond to such changes. This paper proposes a new method for estimating the price elasticity of demand that meets policy needs and can accommodate the presence of increasing block pricing structures.Water Demand Elasticity, Quasi Experiment, Climate Change, Consumer/Household Economics, Demand and Price Analysis, Environmental Economics and Policy, Resource /Energy Economics and Policy,

Valuing Incremental Highway Capacity in a Network

The importance of increments to an existing highway system depends upon their contributions to the accessibility provided by the existing network. Nearly 40 years ago, Mohring [1965] suggested this logic for planning optimal highway investment programs. He argued it could be implemented by measuring the quasi-rents generated by specific additions to an existing roadway system. This paper uses a unique set of additions to a loop roadway in metropolitan Phoenix, together with detailed records of housing sales over the past decade, to meet this need. We find that estimated increases in capitalized housing values due to four segments added during this period range from 73 to over 273 million dollars per mile of the roadway addition.

Evaluating Rubin's Causal Model for Measuring the Capitalization of Environmental Amenities

This paper outlines a new framework for gauging the properties of quasi-experimental estimates of the willingness to pay (WTP) for changes in environmental and other non-market amenities. As a rule, quasi-experimental methods cannot offer alternative hypotheses to judge the quality of their quasi random assignments of treatment and control outcomes to economic agents. Their results must be judged by the explanation of the event used to construct the assignment and the counter examples offered as robustness checks for the logic of each application. This paper develops a four-step procedure for situations that rely on housing price capitalization. It is a computational analog to Chetty's [2009] call for considering the measurement objectives as part of evaluating the relevance of reduced versus structural form modeling strategies. Two diverse applications are used to establish the method's relevance for environmental problems. The first examines the value of a conversion of land cover from xeric to wet landscape. The second examines the clean-up of hazardous waste sites. We find that even when quasi-experimental methods have access to statistically ideal instruments their performance in measuring general equilibrium WTP depends on other aspects of each application.

Sufficient Statistics for Measuring the Value of Changes in Local Public Goods: Does Chetty’s Framework Inform Lind?

The performance of quasi-experimental methods applied to changes in non-market goods depends on the ability of reduced form models to accurately measure willingness to pay. When exogenous changes are non-marginal, the accuracy of the reduced form approximations is not well understood. Further complicating the performance of reduced form models is that the true representation of the non-market good in household utility functions may differ from the perceptions of that good as captured in the reduced form model. This paper evaluates a series of before/after quasi-experiments where the true model is known and examines the performance of these methods under a variety of conditions. We find that performance is impacted by the scale of the change and that differences in perceptions of the amenity between the reduced form model and the underlying utility function play an important role in determining the performance of quasi-experimental applications. For researchers interested in non-market goods where the true representations of changes in relation to the underlying utility function are unknown, the notion of perceived measures of the non-market good in reduced form models should receive considerable attention.Welfare Measurement, Quasi-Experiment, Assignment Model, Perceptions, Non-Marginal Change, Open Space, Resource /Energy Economics and Policy,

Do Citizens Want the Truth about Terrorist Threats Regardless of the Consequences?

This paper proposes the use of consumers’ preferences in formulating policies for keeping secret information about terrorist activities and threats that might compromise future security. We report the results from two surveys indicating that people have clear preferences for full disclosure of some terrorist related information regardless of its consequences for specific industries or future threats. This result is especially clear for threats involving commercial airlines. For those threats associated with more general surveillance or threats to the financial system respondents were more willing to allow government authorities to withhold information.

The Impact of Shale Exploration on Housing Values in Pennsylvania

Horizontal drilling and hydraulic fracturing processes to extract shale gas have raised concerns among local residents over the safety of these new drilling techniques. To assess whether potential negative externalities associated with shale gas exploration are capitalized into surrounding homeowners property values, we estimate a hedonic model combining data on 3,464 housing sales occurring between 2008 and 2010 in a suburban/rural county south of Pittsburgh, PA which experienced large numbers of new horizontal Marcellus wells beginning in late 2008. Using hedonic methods, we find a negative and significant impact to households in close proximity both spatially and temporally to this activity. Further we find that this negative impact disproportionately accrues to homeowners near additional agricultural areas and on well water. In all cases, the negative impact appears relatively short-live