Todd Guilfoos

Efficiency of Viable Groundwater Management Policies

We investigate the relative performance of simple groundwater policies in a spatially detailed aquifer and reveal the distribution of net benefits from those policies. Groundwater policy is plagued with a high level of complexity in achieving the first best outcome, which may be costly and politically infeasible to adopt. We parameterize a 8,457-cell spatially detailed model of the northwest Kansas section of the Ogallala Aquifer and find that simple pricing, quantity, and water market policies perform poorly but can be improved upon by localized policies that are more efficient and garner more popular support. (JEL Q15, Q25)

Optimal Groundwater Extraction under Uncertainty and a Spatial Stock Externality

&NA; We introduce a model that incorporates two important elements to estimating welfare gains from groundwater management: stochasticity and a spatial stock externality. We estimate welfare gains resulting from optimal management under uncertainty as well as a gradual stock externality that produces the dynamics of a large aquifer being slowly exhausted. This groundwater model imposes an important aspect of a depletable natural resource without the extreme assumption of complete exhaustion that is necessary in a traditional single cell (bathtub) model of groundwater extraction. Using dynamic programming, we incorporate and compare stochasticity for both an independent and identically distributed as well as a Markov chain process for annual rainfall. We find that the spatial depletion of the aquifer is significant to welfare gains for a parameterization of a section of the Ogallala Aquifer in Kansas, ranging from 2.9% to 3.01%, which is larger than those found previously over the region. Surprisingly, the inclusion of stochasticity in rainfall increases welfare gains only slightly.

The impact of information on behavior under an ambient-based policy for regulating nonpoint source pollution

[The impact of information on behavior under an ambient-based policy for regulating nonpoint source pollution] Haoran Miao, Jacob Fooks, Todd Guilfoos, Kent Messer, Soni M. Pradhanang, Jordan Suter, Simona Trandafir, Emi Uchida 1 Department of Environmental and Natural Resource Economics, University of Rhode Island 2 USDA Economics Research Service 3 Department of Applied Economics and Statistics, University of Delaware 4 Department of Geosciences, University of Rhode Island 5 Department of Agricultural and Resource Economics, Colorado State University * Corresponding Author. Email: haoran_miao@my.uri.edu. Kingston Coastal Institute, 1 Greenhouse Road, University of Rhode Island, Kingston, RI 02881.

Slow and deliberate cooperation in the commons

We test how fast and slow thought processes affect cooperation for sustainability by manipulating time pressure in a dynamic common-pool resource experiment. Sustainable management of shared resources critically depends on decisions in the current period to leave enough stock so that future generations are able to draw on the remaining limited natural resources. An intertemporal common-pool resource game represents a typical dynamic for social dilemmas involving natural resources. Using one such game, we analyse decisions throughout time. We find that people in this context deplete the common resource to a greater extent under time pressure, which leads to greater likelihood of stock collapse. Preventing resource collapse while managing natural resources requires actively creating decision environments that facilitate the cognitive capacity needed to support sustainable cooperation.Using experimental behavioural methods, this study shows that time pressure leads to worse decisions over the sustainable management of collectively held natural resources.

Rational Expectations Voting in Agent-Based Models: An Application to Tax Ceilings

This paper introduces rational expectations voting into an agentbased model of collective choice. Our model is unique because it generates sophisticated forecasts of endogenous policy outcomes by computationally sampling the space of exogenous random variables. Together these forecasts generate a common prior, a joint distribution of all random variables as a function of the set of policy choices, which agents use to select the policy that maximizes their expected utility. We apply our simulated rational expectations methodology by using administrative data on property taxes from two U.S. cities to investigate how observed levels of (plausibly exogenous) tax-payment uncertainty affect collective choice. Specifically, we show that, for sophisticated risk-averse or loss-averse voters, higher levels of tax-payment uncertainty generate majority support for a binding constraint on collective choice.

The Effect of Cost-Share Programs on Ground Water Exploitation and Nonpoint-Source Pollution under Endogenous Technical Change

Empirical studies suggest that cost-share programs are unlikely to reduce exploitation of ground water and nonpoint-source pollution. By introducing an induced irrigation technology in our model, we find theoretically that the optimal amount of irrigation water and nitrogen fertilizer increases (decreases) when the increased rate of the marginal net economic benefits from their use with an induced irrigation technology exceeds (is less than) an increase in the rate of irrigation efficiency. Our results suggest that producers should use relatively more irrigation water and fertilizer when greater quantities of high-value crops are grown because producers will adopt improved irrigation technologies for such crops.

The Economic and Health Effects of the 2014 Chemical Spill in the Elk River, West Virginia

&NA; In January 2014, Freedom Industries spilled 4‐methylcyclohexylmethanol, a chemical foaming agent used in coal processing, from a storage facility into the Elk River in West Virginia. This chemical spill, one of the most significant in U.S. history, adversely affected the drinking water supply of over 300,000 individuals in the Charleston, West Virginia Metropolitan area. We use synthetic control methods to estimate the casual effects on macro‐economic growth and infant health outcomes from this water crisis. We find a significant decrease in 5‐minute Apgar Scores, a measure of how babies fare in the birthing process and outside of the womb, after the chemical spill. We do not find significant effects for infant birthweight or gestational age. We find a statistically insignificant decrease of per capita GDP in the Charlestown, West Virginia area compared to the synthetic control of 3% two years after the chemical spill.

Special Issue on Economics of Water Quality: Challenges, Policies, and Behavioral Mechanisms

Few issues are as fundamental to human security and survival as access to a supply of clean, safe drinking water. Yet, more than 650 million people worldwide still used unimproved sources of drinking water in 2015-a significant portion of the population of sub-Saharan Africa and Oceania relied on rivers, lakes, ponds, and irrigation canals (UNICEF, World Health Organization 2015), leading to waterborne diseases such as diarrhea and a high rate of mortality among children. Developed countries also grapple with providing safe water supplies due to aging infrastructure, as illustrated by lead contamination of drinking water in Flint, Michigan. In addition to drinking water, water resources provide ecosystem services such as recreation and wildlife habitat that can be severely affected by contamination. In an assessment of 32 percent of the rivers and streams in the United States, the U.S. Environmental Protection Agency (EPA) (2015) found that the quality of the water supplied by 56 percent of those waterways was inadequate to fully support recreation, habitat, and other designated uses. Degraded water quality worldwide is driven by population growth, expanding industrial and agricultural activities, urbanization, decaying infrastructures, and more-frequent extreme weather events associated with climate change.Increasingly complex water quality problems call for more effective and rational approaches to water quality management. This issue of Agricultural and Resource Economics Review focuses on the economics of water quality, advancing our understanding of policies, valuation, and behavioral economics, which play critical roles in debates about how to assess and address water quality challenges. The studies span from individual decision-making and valuation of water quality to assessing the efficiency of institutions that address nonpoint-source pollution. Advancing nonmarket valuation can not only improve our understanding of nonmarket values but also contribute to improving the performance of institutions.Managing Nonpoint-source PollutionIn both developed and developing countries, the most prevalent problem associated with water quality is eutrophication-contamination by nutrients from run-off that choke waterbodies with excessive plant growth (including toxic algal blooms), deprive fish and other species of dissolved oxygen, and sometimes produce toxins. In the United States, eutrophication is caused primarily by nonpoint sources of pollution such as agricultural run-off. Nonpoint-source (NPS) pollution is poorly regulated, and the contamination caused by it remains mostly unmitigated, unlike contamination from point sources, which came under the purview of the Clean Water Act in the 1970s. Given the environmental damage caused by NPS pollution and the high cost associated with remediation and abatement, better ways of managing water quality resources are urgently needed.Developing safe healthy water supplies and mitigating the effects of existing pollution require vast investments of capital, and the economic tradeoffs can be daunting. In 2009, for example, U.S. agricultural producers supplied crops and livestock worth

Valuation of expectations: A hedonic study of shale gas development and New York’s moratorium ☆

331 billion to global markets and, concurrently, released a significant amount of NPS pollutants into U.S. rivers and other waterways from their activities (EPA 2009). Consequently, negotiating tradeoffs between the benefits of high-quality water supplies that produce key economic goods and services and the costs of developing, restoring, and maintaining those supplies is a critically important area of economic research.Economists have identified NPS pollution as the major threat to water systems in the developed world (Olmstead 2010). NPS pollution comes from a variety of sources, including run-o ff of storm water, fertilizers, and animal waste and old or poorly managed wastewater treatment systems, leading to excess nutrients (e.g., nitrogen and phosphorus) and hypoxia. …