RESEARCH

Research Papers:

"Does road expansion induce traffic? An evaluation of Vehicle-Kilometers Traveled in China." Job market paper, in preparation for submission to Journal of Environmental Economics and Management.

Abstract: This paper estimates the causal effect of municipal road expansion on vehicle-kilometers traveled (VKT) in 103 Chinese cities while accounting for the potential for increased car adoption to affect VKT. A novel matching IV strategy is developed to address endogeneity concerns that complements previously used historical infrastructure instruments to provide time-varying identification in a panel data setting. I find that the estimated elasticity of VKT with respect to road length is approximately 1.1, indicating that newly built urban roads lead to a more than proportional increase in total traffic. Given large ongoing infrastructure investment combined with more recently enacted traffic alleviation policies in many Chinese cities, this result provides important new information on the potential impacts of continued infrastructure investment on traffic.

Wolf, D., Chen, W., Gopalakrishnan, S.G., Haab, T. and Klaiber, H.A., “The economic impacts of harmful algal blooms and E.coli on recreational behavior in Lake Erie.” R&R at Land Economics.

Abstract: Lake Erie has been plagued by the emergence and growth of harmful algal blooms (HABs) for nearly 20 years. This paper simultaneously examines the effect of E. coli and HABs on recreational behavior using survey data collected from Ohio recreators who visited Lake Erie during the summer of 2016. We combine survey responses on visitation with information on harmful algal blooms acquired from remote-sensing data. Using simulation based on latent class models of recreation choice, we find that beach-goers and recreational fishermen would lose in aggregate $5.3 million and $59.2 million respectively each year if water conditions became so poor that Lake Erie’s western basin was closed. In counterfactual simulations, we find significant welfare gains of $227,000 and $4.3 million respectively associated with a 40% reduction in phosphorus loadings, which is an objective set by the 2012 Great Lakes Water Quality Agreement (GLWQA). Finally, we recover heterogeneity in recreators’ aversion towards algae and Escherichia coli (E. coli), with beach-goers more averse to E. coli and fishermen more averse to algae, indicating that water quality remediation policies will have strong distributional effects.

Chen, W., Huang, Z. and Yi, Y., "Is there a structural change in the persistence of WTI-Brent oil price spreads in the post-2010 period?" Economic Modelling 50 (2015): 64-71.

Abstract: In recent years, WTI oil has traded at a sizable discount against Brent oil, and this divergence has enlarged the price spreads. We investigate whether there has been a structural change in the persistence of WTI–Brent crude oil price spreads in recent years, i.e., a change from a stationary to a non-stationary time series. The CUSUM of the squares-based test of Leybourne et al. (2007b) is performed in which the breakpoint is not pre-specified, and the estimated breakpoint is found to have occurred in 2010. We conduct various unit root tests for the price spreads in two sub-samples, defined as before and after the estimated breakpoint, and find empirical evidence supporting our persistence change hypothesis. Two alternative persistence change tests are also performed to make our conclusion more robust.

Chen, W., Klaiber, H.A. and Miteva, D.A., "Compensating differentials of rents, wages and agricultural returns: the quality-of-life among Indonesian regencies and cities."

Abstract: This paper develops a novel compensating differential model of quality of life rankings with an agriculture sector. We use data from a developing country, Indonesia, and recover quality-of-life rankings for jurisdictions across the country at five distinct time periods allowing us to examine how quality of life rankings have changed over time. Based on Roback (1982), we introduce an agriculture sector in the theoretical equilibrium system alongside housing and labor markets. This allows us to include rural areas in the quality of life framework directly, which are typically omitted in most of previous studies. In addition, we can better understand the impact of amenities on agricultural production and how those impacts may differ from other industries. To conduct the research we use detailed household data from five waves of the Indonesian Family Life Survey (IFLS) fielded from late 1993 to early 2015 across 13 provinces in Indonesia. We estimate implicit prices for various amenities based on hedonic equations of housing rents, non-farm wages and agricultural returns. The results indicate that compensating differentials exist across the country and in particular the impacts of amenities on agriculture and non-farm labor market are different. Moreover, we calculate the quality-of-life rankings for 192 districts (regencies and cities) in 10 Indonesian provinces.

Chen, W., Flatnes, J.E., Miteva, D.A. and Klaiber, H.A., "The impact of deforestation on ecotourism: A birdwatching example in Mexico."

Abstract: We use citizen science eBird data to explore how deforestation impacts the frequency of bird watching visits to ecotourism hotspots in Mexico. Using detailed data on individual trip report sightings submitted to Ebird, we construct annual count data on 1843 Mexican municipalities from 2008 to 2016 to examine how changes in forest impact visitation patterns. We find that with 1% additional forest loss, the probability for a municipality to receive any birdwatching visitors is likely to decrease by 12.5%, and the number of visits is likely to decrease by 29.4%. These results offer new insights into the impacts of deforestation on economic profits from local ecotourism industry, and provide evidence that citizen science data is an untapped source of potentially valuable information in limited data settings.