On Adaptation to Climate Change and Risk Exposure in the Nile Basin of Ethiopia

This study investigates the impact of climate change adaptation on farm households’ downside risk exposure (e.g., risk of crop failure) in the Nile Basin of Ethiopia. The analysis relies on a moment-based specification of the stochastic production function. We estimate a simultaneous equations model with endogenous switching to account for the heterogeneity in the decision to adapt or not, and for unobservable characteristics of farmers and their farm. We find that (i) climate change adaptation reduces downside risk exposure; farm households that implemented climate change adaptation strategies get benefits in terms of a decrease in the risk of crop failure; (ii) farm households that did not adapt would benefit the most in terms of reduction in downside risk exposure from adaptation; and (iii) there are significant differences in downside risk exposure between farm households that did and those that did not adapt to climate change. The analysis also shows that the quasi-option value, that is the value of waiting to gather more information, plays a significant role in farm households’ decision on whether to adapt to climate change. Farmers that are better informed may value less the option to wait to adapt, and so are more likely to adapt than other farmers.adaptation, climate change, endogenous switching, Ethiopia, risk exposure, stochastic production function, skewness

ON ADAPTATION TO CLIMATE CHANGE AND RISK EXPOSURE IN THE NILE BASIN OF ETHIOPIA

This study investigates the impact of climate change adaptation on farm households’ downside risk exposure (e.g., risk of crop failure) in the Nile Basin of Ethiopia. The analysis relies on a moment-based specification of the stochastic production function. We estimate a simultaneous equations model with endogenous switching to account for the heterogeneity in the decision to adapt or not, and for unobservable characteristics of farmers and their farm. We find that (i) climate change adaptation reduces downside risk exposure, i.e., farm households that implemented climate change adaptation strategies get benefits in terms of a decrease in the risk of crop failure; (ii) farm households that did not adapt would benefit the most in terms of reduction in downside risk exposure from adaptation; and (iii) there are significant differences in downside risk exposure between farm households that did and those that did not adapt to climate change. The analysis also shows that the quasi-option value, that is the value of waiting to gather more information, plays a significant role in farm households’ decision to adapt to climate change. Farmers that are better informed may value less the option to wait to adapt, and so are more likely to adapt than other farmers.adaptation, climate change, endogenous switching, Ethiopia, risk exposure, stochastic production function, skewness, Resource /Energy Economics and Policy, Risk and Uncertainty, D80, Q18, Q54,

Extension of the Traditional Travel Cost Method to a Collective Framework: An Empirical Application

This study proposes a novel approach to estimating a travel cost model that accounts for intrahousehold resource allocation. We define it ‘Collective Travel Cost Method’ (CTCM). The technique is based on an analogy borrowed from the literature of collective household behavior and adapted to the recreational setting. Knowledge of the travel cost to the recreational site of each household member allows us to identify the sharing rule within the household and to estimate a collective Almost Ideal Demand System that takes into account the role of each member’s preferences for consumption choices and how resources are allocated within the household. We show how to identify and estimate welfare measures, such as the equivalent variation (EV), to infer the Willingness-To-Pay (WTP) to access a natural park of each household member. Moreover, the development and estimation of the CTCM allows: (1) to test whether the WTP estimated by the traditional unitary TCM is significantly different from the WTP estimated by the CTCM; (2) to test whether two spouses have equal or different WTP to access the recreational site, and (3) whether the individual WTP estimated by the CTCM is significantly different from the WTP derived by applying the Contingent Valuation Method (CVM) on the same sample of individuals.collective model, compensating variation, equivalent variation, revealed preferences, travel cost method, Willingness-To-Pay.

Detecting Starting Point Bias in Dichotomous-Choice Contingent Valuation Surveys

We examine starting point bias in CV surveys with dichotomous choice payment questions and follow-ups, and double-bounded models of the WTP responses. We wish to investigate (1) the seriousness of the biases for the location and scale parameters of WTP in the presence of starting point bias; (2) whether or not these biases depend on the distribution of WTP and on the bids used; and (3) how well a commonly used diagnostic for starting point bias—a test of the null that bid set dummies entered in the right-hand side of the WTP model are jointly equal to zero—performs under various circumstances. Because starting point bias cannot be separately identified in any reliable manner from biases caused by model specification, we use simulation approaches to address this issue. Our Monte Carlo simulations suggest that the effect of ignoring starting point bias is complex and depends on the true distribution of WTP. Bid set dummies tend to soak up misspecifications in the distribution assumed by the researcher for the latent WTP, rather than capturing the presence of starting point bias. Their power in detecting starting point bias is low.Anchoring, Dichotomous choice contingent valuation, Starting point bias, Double-bounded models, Estimation bias

Implications of Bid Design and Willingness-To-Pay Distribution for Starting Point Bias in Double-Bounded Dichotomous Choice Contingent Valuation Surveys

We examine starting point bias in double-bounded dichotomous choice contingent valuation surveys. We investigate (1) the seriousness of the biases for the location and scale parameters of the willingness-to-pay (WTP) in the presence of starting point bias; (2) whether or not these biases depend on the distribution of WTP and on the bid design; and (3) how well a commonly used diagnostic for starting point bias—a test of the null that bid set dummies entered in the right-hand side of the WTP model are jointly equal to zero—performs under various circumstances. Monte Carlo simulations suggest that the effect of ignoring starting point bias depends on the bid design and on the true distribution of WTP. A well-balanced, symmetric bid design may result in very modest biases even when the anchoring mechanism is very strong. The power of bid set dummies in detecting starting point bias is low. They tend to account for misspecifications in the distribution assumed by the researcher for the latent WTP, rather than capturing the presence of starting point bia

Environmental Risk Factors, Health and the Labor Market Response of Households in the United States

In the first part of the dissertation, I estimate the effect of a married adult's specific health condition on his or her own labor market decisions (labor force participation, earnings, hourly wages, and hours of work) and his or her spouse's. I focus on cancer, stroke, ischemic heart disease, emphysema, chronic bronchitis, chronic obstructive pulmonary disease (COPD) and asthma. The effects differ by health condition and duration of the disease. Among married men who are working, having had emphysema for less than one year is enough to reduce the earnings of a man with college degree to those of a healthy man without high school diploma. My results also suggest that if a man has had cancer, his wife may have to compensate for the ensuing loss in household income by working more hours or entering the labor force. In the second part of the dissertation, I focus on the effect of children's asthma on mothers' labor force participation, on fathers' and mothers' labor supply, and on their hourly wages and weekly earnings. I compare these effects to those of a set of health conditions that includes deformities, congenital anomalies, heart problems, epilepsy and cancer. I find that single mothers with chronically ill children are the most affected group in terms of hours of work lost and reduction in earnings, and that fathers with an asthmatic child less than six years old work more hours per week. Then, I explore how mothers' labor force participation and hours of work affect days missed from school of a chronically ill child. I find that maternal employment is associated with a higher probability of a child missing school, and that this effect is the same for healthy children as for asthmatic children. In contrast, I find that if the mother works, then a child with deformities, congenital anomalies, heart problems, epilepsy or cancer is less likely to experience lost school days than if the mother does not work. I estimate the magnitude of these effects using data from the Medical Expenditure Panel Survey for U.S. households from 1996 to 2002

Extensions of the traditional models of non-market valuation for public goods to a collective framework

Non disponibileWhenever events or a proposed change in policy affect quality or availability of environmental resources and public goods, either explicit or implicit cost-benefit analyses must often be undertaken. It has been recognised that the value of these goods is not explicitly determined through market transactions and the absence of markets makes it extremely difficult to establish a monetary value for access to these goods. Economists answered this challenge by developing methods of nonmarket valuation for public goods. Methods for valuing environmental goods have been categorized as indirect and direct. Direct methods, as the Contingent Valuation Method (CVM), ask consumers what they would be willing to pay (WTP) or accept (WTA) for a change in an environmental amenity. They are examples of stated preference techniques that establish hypothetical markets for public goods. Direct methods have the main advantage that they allow the measurement of non-use values but they are commonly criticised because of the hypothetical nature of the question (i.e. \u2018hypothetical bias\u2019) and the fact that the actual behavior is not observed. Researchers have identified also other problems and biases, such as strategic bias, information bias, and starting point bias (see detailed discussion of the problems in Cummings et al., 1986 and Mitchell and Carson, 1989). To investigate the validity of direct methods, researchers have compared the WTP estimates derived by applying the CVM with the WTP estimates based on indirect methods of valuation (Bishop and Heberlin, 1979; Bishop et al., 1983; Seller et al. 1985; Cameron, 1992; Adamowicz et al., 1994; Carson et al., 1996; Azevedo et al., 2003). Indirect methods, such as the Travel Cost Method (TCM), use actual choices made by consumers. These constitute revealed preferences over goods. The basic premise of the TCM is that the time and the travel cost expenses that people incur to visit a site represent the price of access to the site. The WTP to visit a site is estimated based on the number of trips that people make at different travel costs. The TCM avoids the criticism of being based on hypothetical behavior but it has other problems such as how to handle multiple-day trips, how to value time costs, how to choose the functional form of the demand for trips and how to incorporate temporal uncertainty (Cameron, 1992). This list can be extended but we argue that one of the main limitations is that the TCM focuses on defining a household to have the same utility level as a single individual. It assumes that a household acts as an elementary decision making unit where all resources are pooled and household decisions are made by a single decision maker. In particular, travel cost information is limiting in that it can reveal consumer preferences for non-market goods only capturing family behavior, while instead the WTP is an individual based measure. The correspondence between WTP estimates from the CVM and the TCM is maintained only in the case when considering a sample of singles

Does Adaptation to Climate Change Provide Food Security? A Micro-Perspective from Ethiopia

We examine the driving forces behind farm households' decisions to adapt to climate change, and the impact of adaptation on farm households' food productivity. We estimate a simultaneous equations model with endogenous switching to account for the heterogeneity in the decision to adapt or not, and for unobservable characteristics of farmers and their farm. Access to credit, extension and information are found to be the main drivers behind adaptation. We find that adaptation increases food productivity, that the farm households that did not adapt would benefit the most from adaptatio

Crop diversification and child health: empirical evidence from Tanzania

Malnutrition is recognized as a major issue among low-income households in developing countries with long-term implications for economic development. Recently, crop diversification has been considered as a strategy to improve nutrition and health. However, there is no systematic empirical evidence on the role played by crop diversification in improving human health. We use three waves of the Tanzania National Panel Survey to test the effect of crop diversification on child health. We implement two instrumental variable approaches, and perform several robustness checks to address potential endogeneity concerns. We find a positive but small effect of an increase in crop diversification on child height-for-age z-scores, through greater dietary diversity. The effect is larger for subsistence households and children living in households with limited market access