Abstract: Water withdrawals for the energy sector are the largest use of fresh water in the United States. Using an econometric model of monthly plant-level electricity generation levels between 2001 and 2012, we estimate the effect of water scarcity on the US electricity fuel mix. We find that hydroelectric generation decreases substantially in response to drought, although this baseline generation is offset primarily by natural gas, depending on the geographic region. We provide empirical evidence that drought can increase emissions of CO2 and local pollutants. We quantify the social costs of water scarcity to be $330,000 per month for each plant that experiences a one-standard deviation increase in water scarcity (2015 dollars), a relationship that persists under future projections of water scarcity.
- Journal of Environmental Economics and Management, accepted, 2017.
- Link to published version [pdf]
- RFF Discussion Paper 16-40, 2016.
- Related blog post: “Does water scarcity increase carbon emissions from the electricity sector?” Common Resources, September 2016.
Abstract: This study explores the impact of bicycle-sharing infrastructure on urban transportation. Accounting for selection bias in a matching framework, we estimate a causal effect of the Capital Bikeshare on traffic congestion in the metropolitan Washington, DC, area. We exploit a unique traffic dataset that is finely defined on a spatial and temporal scale. Our approach examines within-city commuting decisions as opposed to traffic patterns on major thruways. Empirical results suggest that the availability of a bikeshare reduces traffic congestion upwards of 4% within a neighborhood. In addition, we estimate heterogeneous treatment effects using panel quantile regression. Results indicate that the congestion-reducing impact of bikeshares is concentrated in highly congested areas.
- Link to published version
- RFF Discussion Paper 15-39-REV, 2016
- Related blog post: “A virtuous cycle? The economics of bicycle sharing,” Common Resources, August 2015
- Media coverage: Common Dreams (9/2014), WTOP (9/2015), WAMU (9/2015), Vox (9/2015), DC.Curbed (9/2015), Gas2.org (9/2015), USA Today (3/2016)
Abstract: In this study, I estimate a causal effect of increased billing frequency on consumer behavior. I exploit a natural experiment in which residential water customers switched exogenously from bimonthly to monthly billing. Customers increase consumption by 3.5–5 percent in response to more frequent information. This result is reconciled in models of price and quantity uncertainty, where increases in billing frequency reduce the distortion in consumer perceptions. Using treatment effects as sufficient statistics, I calculate consumer welfare gains equivalent to 0.5–1 percent of annual water expenditures. Heterogeneous treatment effects suggest increases in outdoor water use.
Abstract: We compare experimental and nonexperimental estimates from a social and informational messaging experiment. Our results show that applying a fixed effects estimator in conjunction with matching to pre-process nonexperimental comparison groups cannot replicate an experimental benchmark, despite parallel pre-intervention trends and good covariate balance. The results are a stark reminder about the role of untestable assumptions–in our case, conditional bias stability–in drawing causal inferences from observational data, and the dangers of relying on single studies to justify program scaling-up or canceling.
Abstract: Pro-environmental preferences are being used increasingly in environmental policy. In this paper, I consider the role of heterogeneous green preferences for private provision of environmental goods that have both private and public characteristics. Under different assumptions of information available to a regulator, I characterize equilibrium properties of several mechanisms. I find incentive-compatible Nash equilibria that provide socially optimal public goods provision when the regulator can enforce individual consumption contracts, as well as when reported consumption contracts are supplemented with group penalties. Throughout the paper, I ground the exposition with examples of consumer behavior in the context of green electricity programs and goal setting for energy conservation.
Abstract: The efficiency properties of price and nonprice instruments for conservation in environmental policy are well understood. However, there is little evidence comparing the effectiveness of these instruments, especially when considering water resource management. We exploit a rich panel of residential water consumption data to examine heterogeneous responses to both price and nonprice conservation policies during times of drought while controlling for unobservable household characteristics. Our empirical models suggest that among owners of detached, single-family homes in six North Carolina municipalities, relatively low-income households are more sensitive to price and relatively high-consumption households are less sensitive to price. However, prescriptive policies such as restrictions on outdoor water use result in uniform responses across income levels, while simultaneously targeting reductions from households with irrigation systems and historically high consumption.
Abstract: A critical concern about a carbon tax (particularly given the sluggish recovery from the Great Recession) is how the resulting increases in energy prices will affect the overall level of economic activity and its rate of growth over time — and to what extent potentially harmful effects can be ameliorate through the use of carbon tax revenues.
Abstract: Under complicated billing structures, the price to which consumers respond remains inconclusive. In this paper, I exploit a quasi-experiment to estimate a causal effect of price for residential water customers during the introduction of increasing block rates for a North Carolina utility. Perceived price is identified through a billing anomaly in which changes in marginal and average prices move in opposite directions. Empirical results contribute evidence that residential water customers respond to average price. Average price elasticity estimates vary from −0.43 to −1.14 across the distribution of consumption in triple-difference models, with an estimate of −0.31 in the tightest bandwidth of regression discontinuity specifications.
Abstract: Observed changes in weather can reveal marginal impacts of climate change on economic outcomes and the potential for adaptation. When modeling the nonlinear relationship between weather and changes in climate damages empirically, model choice can confound the interpretation of marginal and percentage effects and their respective confidence intervals. I present a simple solution for better characterizing semi-elasticities of nonlinear climate damages, and evaluate its relevance in interpreting empirical climate damages. For small marginal effects, the implications of this interpretation error is small; for larger effects, however, the misinterpretation error can be substantial.
- Revisions requested, Climatic Change
- Email for a copy.
Abstract: We introduce a k-means clustering technique to create comparison units in unstructured datasets. When an observation is treated, other units in the cluster serve as an appropriate counterfactual, which provides an algorithmic way to identify heterogeneous treatment effects while retaining straightforward standard error calculations. We apply this technique to value economic impacts from decaying water infrastructure. Using water main break events in Washington, DC, and a yearlong panel of hourly traffic speeds, we estimate a causal effect of main failure on traffic congestion. We find strong evidence of heterogeneous treatment effects across clusters but overall small welfare impacts overall.
- Under review
- Related RFF Discussion Paper 16-33, 2016.
- Related blog post: “A cost of aging water infrastructure: Traffic congestion,” Common Resources, August 2016.
- Media coverage: E&E News (8/2016)
Abstract: We explore a nonlinear, “notched” pricing structure in a novel market—urban bike-sharing—to identify how inframarginal price changes affect consumer behavior. By observing cyclists extending their trips to avoid a discontinuous price increase, we are able to estimate a time-for-money trade-off directly for both commuting and recreational trips. Although our estimation strategy reveals an estimate of consumers’ opportunity cost of time under neoclassical assumptions, we find that a 400% price increase does not affect behavior in a meaningful way. This result suggests consumers respond more strongly to quantity signals, which has direct implications for nonlinear pricing in other settings.
- Under review
- Email for a copy
Research in progress
“Enduring effects of changes in billing frequency: Evidence from urban water use”
“Becker versus the behavioralist: Using targeted messages to promote compliance with outdoor water restrictions,” (with Michael Price, Klaus Moeltner, Anita Castledine, and Shawn Stoddard)
“Water affordability in the U.S.”
“The effects of climate on leisure demand: Evidence from North America,” (with Nathan Chan)
“Pro-social costs of carbon?” (with Nathan Chan)
“The roles of price and persuasion on consumer behavior,” (with Danny Brent)
“Water affordability in the U.S.”
“Learning to lease,” (with Brandon Cunningham)
Wichman, Casey J., “Information and environmental policy,” (dissertation abstract), Journal of the Association of Environmental and Resource Economists, vol. 4, no. 1, 2017.
National Academies of Sciences, Engineering, and Medicine. Valuing Climate Damages: Updating Estimation of the Social Cost of Carbon Dioxide. Washington, DC: The National Academies Press, 2017. (Contributing author).
Wichman, Casey J., “Book Review: Thirst for Power: Energy, Water, and Human Survival,” Water Economics and Policy, 1680007, 2016.
“California’s Water: Water for Cities,” (with Ellen Hanak, Ken Baerenklau, Alvar Escriva-Bou, Jay Lund, Kurt Schwabe, Newsha Ajami, J. R. DeShazo, David Mitchell, Jean-Daniel Saphores, and David Sedlak), Public Policy Institute of California, October 2016.
“Water conservation policies: Prices versus restrictions.” Resources, No. 193, pp. 18-19, Fall 2016.
National Academies of Sciences, Engineering, and Medicine. Assessment of Approaches to Updating the Social Cost of Carbon: Phase 1 Report on a Near-Term Update. Washington, DC: The National Academies Press, 2016. (Contributing author).
“Commentary: Does bicycle infrastructure reduce traffic congestion?” Resources, No. 191, pp. 6-7, Winter 2016.
“Technical assistance for sustainable urban water use,” (with Jeff Hughes , Mary Tiger, Shadi Eskaf, and Christine Boyle), Water Resources Research Institute of the University of North Carolina, 2012.