2021 Working Papers

Browse our Working Papers, listed alphabetically by title.

 

Distributional Effects of Entry Fees and Taxation for Financing Public Beaches Frank Lupi, Roger H. von Haefen, and Li Cheng.

We use a detailed multi-site recreation demand model and general population dataset to assess the demand, welfare and distributional impacts of entrance pricing and taxation schemes to finance Great Lakes beach management. We compare the revenue resulting from uniform entry fees, or gate fees, across sites to additional state income tax that would generate equivalent revenues. We present empirical demand elasticities with respect to total prices inclusive of entry fees as well as elasticities with respect only to the fees. We find that demand is price elastic for total trips and for individual sites, with individual sites being significantly more elastic. However, over a broad range of entry fees, both total trips and individual site demands are elastic with respect to entry fees.

 

Distributional Policy Impacts, WTP-WTA Disparities, and the Kaldor-Hicks Tests in Benefit-Cost Analysis Zachary S. Brown.

I examine how inequality in the distribution of income and a quasi-fixed good (e.g. environmental quality or health) can affect the disparity between aggregate willingness to accept (WTA) and willingness to pay (WTP) for policies that induce joint, nonmarginal and heterogeneous changes to income and the quasi-fixed good. These disparities can generate divergent conclusions from benefit-cost analysis (BCA). In the case of Cobb-Douglas preferences, I show that greater inequality in policy impacts to the quasi-fixed good generally increases the range of conflicting conclusions from BCA using the Kaldor criterion (compensating variation) versus the Hicks criterion (equivalent variation). In two intuitive examples, I show that for any set of impacts to the quasi-fixed good there exists a degree of inequality in which the Kaldor-Hicks tests disagree. This disagreement arises because, with inequality, seemingly marginal policy changes can become nonmarginal when increasingly concentrated among marginalized or privileged groups in society, leading to a widening gap in aggregate WTP versus WTA. Extending the analysis to general CES preferences, I find that when the goods are complements, these same forces can render the Kaldor-Hicks tests inoperable (e.g. when the goods are distributed lognormally). When the goods are substitutes, attenuation of WTP by individuals’ budget constraints can also push the Kaldor-Hicks tests in opposing directions. I conclude that greater inequality can increase the relevance of questioning whether to elicit WTP or WTA in nonmarket valuation for BCA.

 

How Does Congestion Affect the Evaluation of Recreational Gate Fees? An Application to Gulf Coast Beaches Roger H. von Haefen, Frank Lupi.

We investigate how congestion influences the welfare, revenue-raising, and distributional implications of gate fees at outdoor recreational sites. A simple conceptual framework decomposes the effects of gate fees into three distinct components which are then quantified in an application to Gulf Coast beaches. Simulation results suggest that when people are willing to pay to avoid congested beaches, the deadweight loss from gate fees is smaller, the revenue raised is higher, and leakage to untaxed sites is less relative to when congestion feedback effects are ignored. Congestion feedbacks do not substantively change our distributional analysis which implies that gate fees are regressive, do not disproportionately impact minorities, and privilege local recreators at the expense of visitors.

 

How the Future of the Global Forest Sink Depends on Timber Demand, Forest Management, and Carbon Policies Adam Daigneault, Justin S. Baker, Jinggang Guo, Pekka Lauri, Alice Favero, Nicklas Forsell, Craig Johnston, Sara Ohrel, Brent Sohngen

Deforestation has contributed significantly to net greenhouse gas emissions, but slowing deforestation, regrowing forests and other ecosystem processes have made forests a net sink. Deforestation will still influence future carbon fluxes, but the role of forest growth through aging, management, and other silvicultural inputs on future carbon fluxes are critically important but not recognized by bookkeeping and integrated assessment models. When projecting the future, it is vital to capture how management processes affect carbon storage in ecosystems and wood products. This study assesses future forest carbon calculated by global forestry models that manage forests to provide wood products and carbon. The results indicate forests will remain a carbon sink in the future, sequestering 1.2-5.8 GtCO2e/yr under a wide range of drivers and conditions, including increased demand for wood products, agricultural land, and carbon. Improved forest management can jointly increase carbon stocks and harvests without expanding forest area.

 

Left in the Dust? Environmental and Labor Effects of Rural-Urban Water Sales Muyang Ge, Sherzod B. Akhundjanov, Eric C. Edwards and Reza Oladi.

Growing urban populations and shifting precipitation patterns under a changing climate motivate the flexible use of markets to reallocate water in arid regions. To understand the effects of these markets, we examine the United States’ largest ever agriculture-to-urban water transfer, from Imperial County to San Diego County, California. A general equilibrium water trade model is used to illustrate the tradeoff between job preservation and environmental protection trade policies. Using a synthetic control and event study approaches, we find initial declines in agricultural output and labor under fallowing, which protected environmental water. Policy changes increasing the intensity of agricultural water use subsequently decreased inflows to the Salton Sea, exposing areas of fine-silted lakebed, creating additional dust. Dust-related air pollutants, PM10 and PM2.5, increase during the relevant period while placebo non-dust pollutants, Ozone and NO2, do not.

 

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