Christopher Timmins

The Housing Market Impacts of Shale Gas Development

Using data from Pennsylvania and an array of empirical techniques to control for confounding factors, we recover hedonic estimates of property value impacts from nearby shale gas development that vary with water source, well productivity, and visibility. Results indicate large negative impacts on nearby groundwater-dependent homes, while piped-water-dependent homes exhibit smaller positive impacts, suggesting benefits from lease payments. Results have implications for the debate over regulation of shale gas development. (JEL L71, Q35, Q53, R31)

A Dynamic Model of Demand for Houses and Neighborhoods

This paper develops a dynamic model of neighborhood choice along with a computationally light multi-step estimator. The proposed empirical framework captures observed and unobserved preference heterogeneity across households and locations in a flexible way. The model is estimated using a newly assembled data set that matches demographic information from mortgage applications to the universe of housing transactions in the San Francisco Bay Area from 1994- 2004. The results provide the first estimates of the marginal willingness to pay for several non-marketed amenities – neighborhood air pollution, violent crime and racial composition – in a dynamic framework. Comparing these estimates with those from a static version of the model highlights several important biases that arise when dynamic considerations are ignored.

Shale Gas Development and Property Values: Differences Across Drinking Water Sources

While shale gas development can result in rapid local economic development, negative externalities associated with the process may adversely affect the prices of nearby homes. We utilize a triple-difference estimator and exploit the public water service area boundary in Washington County, Pennsylvania to identify the housing capitalization of groundwater risk, differentiating it from other externalities, lease payments to homeowners, and local economic development. We find that proximity to wells increases housing values, though risks to groundwater fully offset those gains. By itself, groundwater risk reduces property values by up to 24 percent.

Demand-Side Technology Standards Under Inefficient Pricing Regimes

When price-setting regulators haveobjectives other than maximizing socialsurplus, the conservation potential ofdemand-side technology standards can besignificantly diminished. This paperdemonstrates this by empirically recovering thesocially sub-optimal preferences of a group ofwater managers in a groundwater-dependentregion of California and simulating theirinefficient price response to the mandatedadoption of low-flow appliances by homeowners. The resulting reduction in the conservationpotential of these appliances is quantified,and a modest tax is shown to be a relativelycost-effective policy tool for conservation. If non-price conservation policies arepreferred according to equity criteria, thepaper suggests that, in order to preserve theirconservation potential, policy-makers should berequired to continue to set prices as if notechnology standards had been introduced.

Demand-Side Technology Standards under Inefficient Pricing Regimes: Are They Effective Water Conservation Tools in the Long-Run?

When price-setting policy-makers have objectives other than maximizing social surplus, the conservation potential of demand-side technology standards can be significantly reduced. This is particularly relevant for the analysis of water policy under conditions of scarcity.1 Regardless of the hydrological or institutional setting, policy-makers around the world have repeatedly demonstrated a preference for non-price demand-side technology standards (like the mandated installation of low-flow toilets or shower heads) or restrictions on use (like rationing or prohibitions on lawn-watering), over efficient pricing in the face of growing water scarcity. Often, these sorts of policies are touted as more equitable than an increase in the price of the most basic of all necessities. This chapter does not dispute the possible equity-enhancing benefits of non-price policies for water conservation, compared to efficient pricing. Rather, it focuses on the overall effectiveness of these policies in dealing with problems of water scarcity, particularly when water management involves dynamic considerations.

Climate Change and Conservation in Brazil: CGE Evaluation of Health and Wealth Impacts

Abstract Ecosystem services are public goods that frequently constitute the only source of capital for the poor, who lack political voice. As a result, provision of ecosystem services is sub-optimal and estimation of their values is complicated. We examine how econometric estimation can feed computable general equilibrium (CGE) modeling to estimate health-related ecosystem values. Against a back drop of climate change, we analyze the Brazilian policy to expand National Forests (FLONAS) by 50 million hectares. Because these major environmental changes can generate spillovers in other sectors, we develop and use a CGE model that focuses on land and labor markets. Compared to climate change and deforestation in the baseline, the FLONAS scenario suggests relatively small declines in GDP, output (including agriculture) and other macro indicators. Urban households will experience declines in their welfare because they own most of the capital and land, which allows them to capture most of the deforestation benefits. In contrast, even though rural households have fewer opportunities for subsistence agriculture and face additional competition with other rural agricultural workers for more limited employment, their welfare improves due to health benefits from conservation of nearby forests. The efficiency vs. equity tradeoffs implied by the FLONAS scenario suggests that health-related ecosystem services will be underprovided if the rural poor are politically weaker than the urban rich. In conclusion, we briefly discuss the pros and cons of the CGE strategy for valuing ecosystem-mediated health benefits and evaluating contemporary policies on climate change mitigation.

Nonparametric Identification and Estimation in a Roy Model With Common Nonpecuniary Returns

We consider identification and estimation of a Roy model that includes a common nonpecuniary utility component associated with each choice alternative. This augmented Roy model has broader applications to many polychotomous choice problems in addition to occupational sorting. We develop a pair of nonparametric estimators for this model, derive asymptotics, and illustrate small-sample properties with a series of Monte Carlo experiments. We apply one of these models to migration behavior and analyze the effect of Roy sorting on observed returns to college education. Correcting for Roy sorting bias, the returns to a college degree are cut in half. This article has supplementary material online.

Social Exclusion and the Two-Tiered Healthcare System of Brazil

In Brazil, there exists a two-tiered system of healthcare access. Those with sufficient means have access to a private system of healthcare that provides quality treatment on demand, while the remainder of the country relies on an overburdened system of public clinics and hospitals. Household survey data are used to determine which socio-demographic groups rely most on this public healthcare system. Current demographic trends suggest that the public healthcare infrastructure will become more and more heavily used in the coming decades. A stylized model of healthcare choice is estimated, and its parameters are used to conduct counterfactual simulations of the welfare implications of this increased congestion, and of policies to offset it, like private healthcare subsidies.

White Flight and Coming to the Nuisance: Can Residential Mobility Explain Environmental Injustice?

Effective environmental justice (EJ) policy requires an understanding of the economic and social forces that determine the correlation between race, income, and pollution exposure. We show how the traditional approach used in many EJ analyses cannot identify nuisance-driven residential mobility. We develop an alternative strategy that overcomes this problem and implement it using data on air toxics from Los Angeles County, California, USA. Differences in estimated willingness to pay for cleaner air across race groups support the residential mobility explanation. Our results suggest that Hispanics may dislike cancer risk but be less willing to trade other forms of consumption to avoid it. As a result, household mobility responses may work against policies designed to address inequitable siting decisions for facilities with environmental health risks.

Environmental Regulations and the Welfare Effects of Job Layoffs in the United States: A Spatial Approach

This article develops welfare-consistent measures of the employment effects of environmental regulation. Our analysis is based on a microeconomic model of how households with heterogeneous preferences and skills decide where to live and work. We use the model to examine how job loss and unemployment would affect workers in Northern California. Our stylized simulations produce earnings losses that are consistent with empirical evidence. They also produce two new insights. First, we find that earnings losses are sensitive to business cycle conditions. Second, we find that earnings losses may substantially understate welfare losses once we account for the fact that workers may have to commute further or live in a less desirable community after losing a job.