Progress 12/14/07 to 09/30/12
OUTPUTS: The outputs on this project over the past year include journal publications (see list below); presentations at workshops, conferences, and seminars; involvement in governmental assessment reports; presentations to government agencies; and involvement in model intercomparison exercises. Presentations of work related to this project were given at the annual meetings of the Association of Environmental and Resource Economics (AERE); the Western Economic Association (WEA); the Northeastern Agricultural and Resource Economics Association (NAREA); and the American Agricultural Economics Association (AAEA), the annual meeting of Regional Research Project W2133, and to various government agencies and public forums. Work from this project on integrated assessment has been incorporated into governmental assessments reports such as the Intergovernmental Panel on Climate Change (IPCC) Fifth Assessment Report. Presentations have also been given to government agencies such as the US Department of Energy and the US Environmental Protection Agency. Reports on work from this project on invasive species have been submitted to the AS Army Corps of Engineers, which is incorporating that work into the congressional mandated GLMRIS study, and to USDA APHIS. PARTICIPANTS: Richard Ready, James Shortle, Karen Fisher-Vanden, Charles Abdalla, Hernan Bejarano, AEREC Ph.D. student, PSU (supported and trained); Milagro Saborio, Rodriguez, AEREC Ph.D. student, PSU (supported and trained); Nikolaos Mykoniatis, AEREC Ph.D. student, PSU (trained); Haoying Wang, AEREC Ph.D. student, PSU (supported and trained); Hao Yuo Shr, AEREC Ph.D. student, PSU (supported and trained); Meri Davlasheridze, AEREC Ph.D. student, PSU (supported and trained); Qin Fan, AEREC Ph.D. student, PSU (supported and trained); Kathryn Daenzer, post-doctoral researcher, PSU, (supported and trained). TARGET AUDIENCES: Federal and State government agencies involved in natural resource and environmental policy (USEPA, USDOI, USDA, PADEP, PADCNR); Research community, both domestic and international; graduate and undergraduate students. PROJECT MODIFICATIONS: Regional research project W2133 was terminated on September 31,2012. Regional research project W3133 was approved for the period October 1, 2012 through September 31, 2017.
Research done this year on integrated assessment has resulted in improved models for the assessment of climate change impacts, adaptation, and mitigation which are used to inform US governmental agencies and international entities such as the IPCC. The research done this year has improved upon our knowledge of how economies adapt to changes in temperature and precipitation, including the migration of populations across the US in reaction to the increased incidence of extreme temperature (both hot and cold) and extreme precipitation. Research done this year on invasive aquatic species, in collaboration with colleagues at Cornell University, has resulted in a model of recreational angling in the Great Lakes and Upper Mississippi and Ohio River basins, and a model of how that angling could change as a consequence of inter-basin transfer of aquatic nuisance species. Research done on invasive terrestrial species, in collaboration with colleagues at the Cary Institute, has resulted in projections of potential impacts of invasive insects on northeastern forests. Research done this year on bioeconomic modeling has resulted in a model of oyster and crab populations in the Chesapeake Bay. This model has been used to explore various management approaches, and the potential for oysters in achieving water quality goals. Research done this year on Marcellus shale gas development has revealed issues surrounding wastewater disposal. Research done this year on environmental policy design has revealed new insights into the potential for water quality trading to achieve water quality objectives at lower cost.
- Edmundson, C. 2012. Marcellus Shale Natural Gas Drilling Operator's Choice of Wastewater Disposal Method. M.S.Thesis. The Pennsylvania State University, University Park, PA. 82 pp.
- Fisher-Vanden, K., K. Schu, I. S. Wing, and K. Calvin. 2012. Decomposing the impact of alternative technology sets on future carbon emissions growth. Energy Economics (In Press).
- Shortle, J. 2012. Water Quality Trading in Agriculture. Report to the Organization for Economic Cooperation and Development, Directorate for Trade and Agriculture. OECD Publishing 50 pages http://www.oecd.org/tad/sustainableagriculture/49849817.pdf.
- Shortle, J., M. Ribaudo, R. Horan, and D. Blandford. 2012. Reforming Agricultural Nonpoint Pollution Policy in an Increasingly Budget-Constrained Environment. Environmental Science and Technology 46 (3):1316-1325.
- Ready, R. 2012. Economic Considerations in Wildlife Management. In, Decker, D., S. Riley and W. Siemer, eds. Human Dimensions of Wildlife Management. Baltimore. Johns Hopkins University Press pages 68-84.
Progress 10/01/10 to 09/30/11
OUTPUTS: Willingness to Pay for Renewable Energy: A survey was conducted of Pennsylvania residents measuring their attitudes toward and willingness to pay for renewable energy production in Pennsylvania. New econometric models were developed to analyze the survey results. Spatial Hedonic Pricing Models: Using a dataset of home prices previously developed as part of this project, new spatial hedonic pricing models were developed and estimated. Invasive Species: A new project, joint with Cornell University and funded by the Army Corps of Engineers, was begun that will project the potential impacts of aquatic nuisance species (ANS) transfer between the Great Lakes basin and the Upper Mississippi River basin on recreational angling participation, expenditures, and consumer surplus values. Initial scoping work conducted this year included site visits and discussions with key informants. Focus groups will be conducted in November and December in preparation for an angler survey to be conducted next year. An initial typology of recreational anglers was developed that will be furthered refined based on focus group results. PARTICIPANTS: Richard Ready, AERS; James Shortle, AERS; and Alan Kleiber, AERS TARGET AUDIENCES: Pennsylvania Legislature, Pennsylvania Department of Agriculture, County farmland protection boards, U.S. Army Corps of Engineers, and State fisheries agencies. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.
Willingness to Pay for Renewable Energy: A survey of Pennsylvania residents showed broad support for increasing the proportion of electricity generated in Pennsylvania that comes from renewable sources, and broad willingness to pay to accomplish that goal. These attitudes were consistent across all demographic groups and political affiliations. Pennsylvania residents support strengthening the Alternative Energy Portfolio Requirement to increase the percentage requirement from renewable sources. Pennsylvania residents have clear, consistent preferences across energy generation technologies, preferring cleaner energy sources (wind, hydro, solar, improved efficiency) over energy sources based on combustion of fossil fuels or biomass or nuclear power. Spatial Hedonic Pricing Models: Previous research had found conflicting results on whether homes located close to land protected from development by agricultural conservation easements (ACE) sell for higher prices than similar homes not located near ACEs. Research in Maryland suggested that ACEs have a positive impact on nearby house prices, but research in Berks County, PA suggested a negative impact. Using more sophisticated spatial models, we found that the impact of ACEs on nearby property values can vary spatially within a single county, so that houses near ACEs sell for higher prices in some portions of a county while the impact is reversed in other portions of the same county. This is an important finding, because it suggests that the amenity values from farmland can vary at small scales, and policies for farmland protection should be targeted to the local situation. Invasive Species: Scoping work has suggested that ANS transfer could impact recreational fish species, but that the impacts on fish numbers would tend to be moderate (10-25%). This is important because it helps bound the range of impacts to be considered in the survey to be administered next year.
- Yoo, J. 2011. Advances in Nonmarket Valuation Econometrics: Spatial Heterogeneity in Hedonic Pricing Models and Preference Heterogeneity in Stated Preference Models. Ph.D. Thesis. The Pennsylvania State University, University Park, PA. 116 pp.
Progress 10/01/09 to 09/30/10
OUTPUTS: 1) Spatially-explicit land use projections were developed for selected watersheds in the Susquehanna River Basin. 2) Work began on a general population survey measuring Pennsylvanians' opinions toward and willingness to pay for renewable energy. Initial focus groups were conducted, and a draft survey was written. The survey will be implemented in two stages in Fall 2010 and Winter 2011. 3) Work began on estimating spatial econometric hedonic pricing models, to determine whether previous estimates of the value of agricultural conservation easements are robust to model specification. A dataset was assembled that includes property transactions in two counties and measures of proximity to agricultural conservation easements. Three different spatial models have been estimated to date. 4) Work continued on developing the theoretical foundation for the use of and methods to estimate sorting models of equilibria in real estate markets. 5) Work continued exploring the impact of technological change and energy efficiency policies on energy use and efficiency in China. 6) Work continued to develop global economic models for use in analyzing international climate change policies. 7) Work began evaluating the potential impact of infestation by the Asian Longhorned Beetle on Northeastern forests. PARTICIPANTS: PI: Richard Ready. Other AERS personnel on project: James Shortle, Karen Fisher-Vanden and Allen Klaiber. Penn State collaborators: Tom Richard, Clare Hinrichs, Denise Wardrop, Ray Najjar, Christopher Duffy, Michael Jacobsen. Graduate Students involved: James Yoo, Nikolaus Mykoniatis, External Collaborators: Mathew Holt (University of Alabama), Daniel Phaneuf (North Carolina State University), V. Kerry Smith (Arizona State University), John Weyent (Stanford University), Steve Frolking (University of New Hampshire), Mark Friedl (Boston University), and Regine Hock (University of Alaska Fairbanks). TARGET AUDIENCES: (Following same numbering used in Outputs section) 1) This work is being conducted for a project funded by US EPA. Others who will be interested in projected impacts on wetland include PA DEP and stakeholders interested in wetland condition and function. 2) This work is being funded by the Center for Rural Pennsylvania. The results will be of interest to electricity generators, alternative energy companies, and stakeholders who are advocating for increased renewable energy production. 3) This work is primarily of interest to academics in the field of environmental economics. The results will affect how hedonic price analysis is conducted. 4) The target audience includes both policy analysts seeking to understand how ecosystem services and open space amenities impact development patterns and household location choices as well as researchers trying to model the behavior of households and home developers. 5) This work is funded by the US Department of Energy. The results will be of interest to U.S. and other policy makers who need to anticipate energy use and greenhouse gas emissions in China. 6) This work is being funded by Joint Global Change Research Institute. The model will be used by the EPA for climate change policy analysis. 7) This work is being funded by USDA APHIS. The results will be useful in determining the level of investment that should be made in preventing and responding to ALB outbreaks. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.
(Following same numbering used in Outputs section) 1) A future land use scenario was developed that is plausible and consistent with anticipated population growth was developed, using models estimated from past observed land use change. ARCMap grid maps were developed at 30mX30m resolution for selected watersheds. These will be used as inputs into hydrological models. 2) Initial focus group results showed that Pennsylvania residents are fairly well informed about renewable energy, and capable of answering specific questions about it. Based on the focus groups, a mail survey was developed including a set of stated choice questions that will be used to estimate willingness to pay for different types of renewable energy. 3) Initial model results show that property value data shows strong spatial correlation, but that estimated impacts of agricultural conservation easements on nearby residential properties are fairly robust to model specification. 4) Klaiber and Smith  developed the conceptual framework required to evaluate the real-world performance of general equilibrium household sorting models applied to environmental amenities. This work has been presented at 4 conferences over the past year, including an invited presentation at an international conference in India and at a MacArthur Foundation funded benefit/cost conference. This work showed that the assumed necessity of ideal natural experiments is in many cases not required to obtain very precise estimates of consumers' valuation of ecosystem and land services. This finding suggests that the more heavily parameterized structural general equilibrium models should be seen as equally capable of producing reliable, policy relevant answers to real-world questions. As further evidence of this, the National Science Foundation has recently funded a proposal using structural models to analyze stormwater runoff and climate change induced responses by households and home developers for the Chesapeake Bay region with Klaiber as a Co-PI. Building on this work, Klaiber and Smith  undertook several reduced form studies including evaluating the importance of infrastructure to economic and urban growth. This research found that the value of infrastructure was heavily dependent on its contribution to a larger network of infrastructure and therefore should be prioritized based on this larger contribution. Lastly, Klaiber and Phaneuf  developed and estimated a general equilibrium model of household sorting in the Twin Cities which accounts for household interactions and can predict the welfare implications of alternative land conservation programs when households are permitted to re-optimize following the introduction of such programs. This work has lead to interest by and collaboration with the Phoenix, AZ water department seeking to model household responsiveness to water price schedules and how those responses might vary as a result of climate fluctuations. 7) This work began at the end of the reporting period. Initial agreement was reached among collaborators about the general methodology that will be used to simulate the impacts of ALB infestation.
- Ready, R. C., P. A. Champ, and J. L. Lawton. 2010. Using Respondent Uncertainty to Mitigate Hypothetical Bias in a Stated Choice Experiment. Land Economics 82(May):363-381.
- Ready, R. C. 2009. Advances in Environmental Benefit Transfer: Discussion. American Journal of Agricultural Economics 91(December):1351-1352.
- Fisher-Vanden, K. and M. S. Ho. 2010. Technology, Development, and the Environment. Journal of Environmental Economics and Management 59:94-108.
- Klaiber, H. A. and D. J. Phaneuf. 2010. Valuing Open Space in a Residential Sorting Model of the Twin Cities. Journal of Environmental Economics and Management 60(2):57-77.
- Klaiber, H. A. and M. T. Holt. 2010. The Role of Theoretical Restrictions in Forecasting with Inverse Demand Models. American Journal of Agricultural Economics 92(1):70-85.
- Klaiber, H. A. and V. K. Smith. 2010. Valuing Incremental Highway Capacity in a Network. NBER Working Paper #15989. 45 pp. http://www.nber.org/papers/w15989.
- Klaiber, H. A. and D. J. Phaneuf. 2009. Do Sorting and Heterogeneity Matter for Open Space Policy Analysis An Empirical Comparison of Hedonic and Sorting Models. American Journal of Agricultural Economics 91(5):1312-1818.
- Klaiber, H. A. and V. K. Smith. 2009. Evaluating Rubin's Causal Model for Measuring the Capitalization of Environmental Amenities. NBER Working Paper # 14957. 64 pp. http://www.nber.org/papers/w14957.
Progress 10/01/08 to 09/30/09
OUTPUTS: A project on spatial land use implications of global climate change and biofuels policy was completed. M.S. student Jacqueline Yenerall completed her thesis on this topic. A project on the impacts of land use and climate change on wetland function continues. Land use projections have been completed, and these are being formatted so that they can be used as inputs into hydrologic models. PARTICIPANTS: Nothing significant to report during this reporting period. TARGET AUDIENCES: The project has several target audiences. Research on stated preference methodology is targeted to academics in the discipline of environmental economics, agencies that use nonmarket valuation in project evaluation and planning, and stakeholders interested in environmental regulation and management. Research on the impact of eased farmland on nearby property values is targeted to academics in the disciplines of land and environmental economics, agencies and local governments that have programs aimed at farmland preservation, and interested stakeholders. Research on hedonic pricing methodology is targeted to academics in the discipline of environmental economics and local planning agencies. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.
Research on the land use impacts of climate change and biofuels policy showed that increased temperatures would induce shifts in cropping patterns in Pennsylvania. Although these adjustments by farmers vary spatially, there is a general tendency to shift toward small grains and soy and away from corn, pasture and hay. Policies to support production of ethanol from corn induce shifts toward corn, and induce some conversion from forest to cropland. If technological advances allow production of ethanol from cellulosic grass crops, the land to grow these grass crops would come from all other crop categories. Research to project future land use change (urbanization) in the Susquehanna River basin showed that urbanization is expected to occur in areas where population is growing and in areas close to existing urbanized land.
- Hanley, N., R. Ready, S. Colombo, F. Watson, M. Stewart and E.A. Bergmann. 2009. The Impacts of Knowledge of the Past on Preferences for Future Landscape Change. Journal of Environmental Management 90(March):1404-1412.
- Bergstrom, J. C., and R. C. Ready. 2009. What Have We Learned from Over 20 Years of Farmland Amenity Valuation Research in North America Review of Agricultural Economics 31(Spring):21-49.
Progress 10/01/07 to 09/30/08
OUTPUTS: A collaborative research project with personnel at the U.S.F.S. on stated preference valuation methodology was completed. PhD student Fernando Carriazo completed his dissertation using hedonic pricing to value changes in air quality in Bogota, Columbia. M.S. student Matthew Loiacono completed his thesis measuring the impact of agricultural conservation easements on residential property values. A collaborative research project with economists in Scotland valuing landscape changes was completed. A new project was started projecting land use change in the Susquehanna River Basin and its impacts on wetlands. PARTICIPANTS: Richard Ready directed the project. Two graduate students, Matthew Loiacono and Fernando Carriazo wrote theses under the project. TARGET AUDIENCES: The project has several target audiences. Research on stated preference methodology is targeted to academics in the discipline of environmental economics, agencies that use nonmarket valuation in project evaluation and planning, and stakeholders interested in environmental regulation and management. Research on the impact of eased farmland on nearby property values is targeted to academics in the disciplines of land and environmental economics, agencies and local governments that have programs aimed at farmland preservation, and interested stakeholders. Research on hedonic pricing methodology is targeted to academics in the discipline of environmental economics and local planning agencies. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.
Research on stated preference valuation showed that stated choice valuation can overstate actual values of environmental goods due to hypothetical bias, but that this bias can be mitigated through calibration. This result will be useful to researchers using the stated choice method. Research on the value of air quality in Bogota, Columbia showed the importance of considering the interaction between neighborhood social conditions and air quality, specifically, the value of air quality improvements varies depending on the social stratum of the neighborhood. This result will be useful for evaluating environmental quality changes in urban areas. Research on the impact of conservation easements on nearby property values showed that conservation easements may be targeted to farms that have negative amenity impacts, but that the signing of the easement itself increases nearby property values. This result will be useful to programs that work to preserve farmland.
- Navrud, S., R.C. Ready, K. Magnussen, and O. Bergland. 2008. Valuing the social benefits of avoiding landscape degradation from overhead power transmission lines - Do underground cables pass the benefit-cost test Landscape Research. 33:281-296.