Essays on Spatial Analysis of Policy Impacts

This thesis is composed of two essays under the theme of spatial analysis of policy impacts. The objective of the first essay was to analyse how population dynamics affect greenhouse gas (GHG) emissions. The effects of population redistribution resulting from the South Korean government’s decentralization efforts on GHG emissions were assessed. Simulation results suggest that the direction of change in total GHG emissions depends on the share of the population redistributed from higher to lower population density regions. If the entire redistributed population of 877,000 persons expected from the government’s decentralization project were from the Seoul Area, annual CO2e [carbon dioxide equivalent] would increase by 1.72%-2.26% compared to benchmark levels. Alternatively, more balanced migration between higher and lower population density regions, i.e., 65% of the 877,000 persons from higher-density locations to lower-density destinations and 35% from lower-density to higher-density regions, decreases CO2e [carbon dioxide equivalent] by 1.49%-2.42%. The second essay evaluated the impact of highway disbursement under the American Recovery and Reinvestment Act (ARRA) on highway demand in the frame of cost and benefit analysis. Highway demand equation was estimated by employing a spatial Durbin model and panel data for the 48 contiguous US states during 1994-2008. The estimates from the equaiton were used to validate the hypothesis that the different highway disbursements caused different upwards shifts in the highway demand curves. The different shifts in demand curves resulted in a wide range of consumer surplus increases across states. The consumer surplus estimates, along with explicit and implicit costs associated with additional highway usage, were used to estimate the total net benefit of ARRA highway disbursement and the net benefits per dollar spent for each state. Estimated total net benefits for the 48 states as a result of the $27.2 billion in ARRA highway disbursements were$4.6 billion in, which yield an average net benefit of $0.17 per dollar spent

Effects of Forestland Ownership Conversion on Greenhouse Gas Emissions: The Case of South Korea

This research analyzed the effects of forestland conversion from private to public ownership on greenhouse gas emissions by quantifying the relationship between forestland ownership conversion and deforestation, and then examining the effects of the change in deforestation on greenhouse gas emissions in South Korea. Ex ante simulations forecast greenhouse gas emissions resulting from deforestation rates under the current level of national forestland and three scenarios of increased percentages of national forestland. The findings suggest that increasing the percentage of national forestland would mitigate the increase in the deforestation rate, which in turn would moderate the increase in greenhouse gas emissions.greenhouse gas emissions, Forestland Ownership, Environmental Economics and Policy, Q15, Q23, Q24, Q54,

Impacts of Highway Infrastructure Investment Under the American Recovery and Reinvestment Act

This study evaluated the impact on highway demand of highway disbursements under the American Recovery and Reinvestment Act (ARRA). Vehicle miles traveled were used to estimate a highway demand equation employing a spatial Durbin model for the 48 contiguous U.S. states during 1994-2008. Estimates from the equation were used to test the hypothesis that highway disbursements caused different upward shifts in the highway demand curves of states. We estimated $8.2 billion in total net benefits for the 48 states as a result of the$27.2 billion in ARRA highway disbursements, yielding an average net benefit of $0.30 per dollar spent

Economics of Technological Change and Induced Innovation

My dissertation examines different aspects of technological progress and its impact on input allocations and productivity growth in U.S. agriculture. In the first chapter, I test whether the Hicks’ Induced Innovation Hypothesis (IIH) holds in the industry for the period 1960-2004 using state-level input price and quantity data with major focus of allowing for a non-neutral innovation function. With homothetic production and innovation function, I derive a structural relationship between the expected input price ratio and input allocation under cost minimization which permits the effect of the IIH to be distinguished from general factor substitutions. The contributions are threefold: (1) I demonstrate that input saving behavior consistent with the IIH would be observed in response to an increase in the relative input price for a wide range of elasticities of substitution, (2) I document that the both relationships between factor augmentation and expected relative price and between factor-saving behavior and marginal research cost are not a monotonic function of the elasticity of substitution when the innovation function is accounted for, and (3) I provide a test procedure that is robust to the assumption of a time-variant and non-neutral innovation possibilities frontier in the innovation creating industry. Considerable supporting evidence for the IIH is found in the data for all inputs except land. My second chapter uses the same dataset as the first chapter and tests whether the IIH holds while accounting for adjustment costs of quasi-fixed inputs. The findings suggest that none of the input categories instantaneously adjust to their desired level in one production period in U.S. agriculture. However, empirical test for the IIH using modified research lags that are based on the adjustment rate estimates result in less support for the IIH. The third chapter investigate spillover effects of public research on productivity growth in U.S. agriculture. A spatial econometric model is used to reduce bias in productivity equation estimation. The findings show that a large portion of productivity growth has been driven by public research investment and that a state’s research outcome can provide benefits to other states that collectively exceed its own benefit

Testing the Induced Innovation Hypothesis : accounting for innovation creation and innovation implementation incentives

Despite extensive empirical literature on the induced innovation hypothesis in US agriculture, this article reports only the second set of tests for this industry that account for supply as well as demand for new input-saving technology. Rather than assuming a specific innovation production function, we examine the relationship between research intensity and input prices in several different reduced-form specifications. Considering four inputs in the innovation-implementing industry -- land, labor, fertilizer, and energy -- we find non-trivial but limited support for the induced innovation hypothesis in public agricultural research. The most support for the hypothesis is found for research decisions aimed at saving fertilizer, followed in turn by energy, labor, and land

Non-Neutral Marginal Research Costs and Induced Innovation

We test Hicks’ induced innovation hypothesis (IIH) in U.S. agriculture using a state-level panel dataset of input prices and quantities for the period 1960-2004. A two-stage cost minimization model where decisions of research investment allocation predates those of input allocations is set forth. Parametric relationships between expected relative price change and input quantity allocation that represent technical changes are obtained distinctively from those between current relative price change and input quantity allocation, which represent general factor substitutions. Our model allows both for time-varying, non-neutral research costs across states and time while only requiring that unobserved trends in relative costs of research are equal among states. Considerable evidence for the IIH is found for three of six input pairs

Effects of Forestland Ownership Conversion on Greenhouse Gas Emissions: The Case of South Korea

This research analyzed the effects of forestland conversion from private to public ownership on greenhouse gas emissions by quantifying the relationship between forestland ownership conversion and deforestation, and then examining the effects of the change in deforestation on greenhouse gas emissions in South Korea. Ex ante simulations forecast greenhouse gas emissions resulting from deforestation rates under the current level of national forestland and three scenarios of increased percentages of national forestland. The findings suggest that increasing the percentage of national forestland would mitigate the increase in the deforestation rate, which in turn would moderate the increase in greenhouse gas emissions