- Research & Extension
Professor Steve Dundas published "Fall in the sea, eventually? A green paradox in climate adaptation for coastal housing markets" in September 2020 in the Journal of Environmental Economics and Management. The paper looks at how an efficient adaptation to climate change in coastal areas is likely to require public policy interventions. New policies or expectations of policy changes that impact private assets, such as housing, may generate economic incentives that result in unintended consequences. The authors examine the effect on new housing development resulting from a scientific report by a regulatory agency mandating coastal communities in North Carolina (NC) consider sea-level rise when developing new land-use policies. Estimates from our preferred triple-differences model suggest the policy announcement increased building permits by 32% in coastal NC counties until permitting returned to pre-policy levels after a moratorium on new regulations was passed by the state legislature. This green paradox in coastal climate adaptation implies that hundreds of millions of dollars in additional unregulated housing was constructed in NC locations vulnerable to sea-level rise likely due to perverse incentives generated by a policy signal.
Professor Jeff Reimer, in a June 2020 paper "WEST: Water economy simulation tool to predict impacts of economic and environmental shocks," published in Advances in Water Resources, shows that regions with vulnerabilities in their food-energy-water nexus may also have economic vulnerabilities. Actions to reduce environmental vulnerabilities may conflict with community concerns about jobs and economic vitality. To account for these potentially competing concerns, this study builds a nexus simulation model that incorporates water, energy, food, and detailed economic data. The model can be used for standalone analysis or incorporated into a multi-disciplinary design optimization framework. The model is called WEST (for Water Economy Simulation Tool) and can show how jobs and economic growth interact with surface and groundwater use, food, and energy. A case study for the U.S. state of Oregon illustrates the insights to be gained from the approach and provides a template for readers to develop their own WEST simulation model.
In a Centre for Economic Policy Research (CEPR) discussion paper entitled "Country of Women? Repercussions of the Triple Alliance War in Paraguay" from May 2020, Professor Jennifer Alix-Garcia examines skewed sex ratios that often result from conflict, disease, and migration. The long term impacts of these skewed ratios remain less understood. The War of the Triple Alliance (1864-1870) in South America killed up to 70% of the Paraguayan male population. According to Paraguayan national lore, the skewed sex ratios resulting from the conflict are the cause of present-day low marriage rates, high rates of out-of-wedlock births and a generally male chauvinist culture. We collate historical and modern data to test this conventional wisdom in the short and the long run. We examine both cross-border and within-country variation in child-rearing, education and labor force participation in Paraguay over a 150 year period. We find that more skewed post-war sex ratios are associated with higher out-of-wedlock births, more female-headed households, and better female educational outcomes, even after the first returned to normal. Cross-country comparisons suggest that Paraguayan women are less likely to be employed than those in neighboring districts in Argentina and Brazil, but that within Paraguay, they are more likely to be employed where the sex ratio shock was more severe. The impacts of the war persist into the present, and are seemingly unaffected by variation in economic openness, uncertainty, or traditional norms.
Professor John Antle argues in "Digital agriculture to design sustainable agricultural systems," an important paper from April 2020 in Nature Sustainability that the global food system must become more sustainable. The article shows tha digital agriculture — digital and geospatial technologies to monitor, assess and manage soil, climatic and genetic resources — illustrates how to meet this challenge so as to balance the economic, environmental and social dimensions of sustainable food production. The article concludes that until society makes the needed investments in science-based, participatory processes to map out realistic and equitable options for achieving sustainable development goals, progress will remain limited. But the good news is that the tools such as digital agriculture needed to design and implement more sustainable agricultural development pathways for both developing and industrialized countries are advancing rapidly.
Professors Nadia Streletskaya and Sam Bell published "Agricultural Adoption and Behavioral Economics: Bridging the Gap" in March 2020 in the journal Applied Economics Perspectives and Policy. In this paper, they provide a review of the linkages and complementarities between agriculture adoption and behavioral economics, highlighting three themes that hold potential for future research. Both disciplines would benefit from a wider cross‐pollination of methods, such as the use of large‐scale observational data in behavioral economics research, and the wider use of experiments in the adoption literature. In order to provide policymakers with relevant and robust evidence on agricultural adoption, experimental methods could be employed at the farm‐level. Along the same lines, behavioral economists could capitalize on the opportunity to validate behavioral models with farmers given their strong social identity, non‐trivial stakes in decision‐making, and central role as land managers in environmental, social and health outcomes.
Professor JunJie Wu, along with former graduate students Jian Shi and Beau Olen, published "Assessing effects of federal crop insurance supply on acreage and yield of specialty crops" in March 2020 in the Canadian Journal of Agricultural Economics. The paper shows that crop insurance may affect harvested acreage and yield by influencing producers’ behavior such as land allocation and input use. Although specialty crops are a major source of farm income, especially on the U.S. west coast, they have not received as much attention as field crops in previous empirical studies. This paper assesses the effect of moral hazard and adverse selection associated with the federal crop insurance program (FCIP) on the acreage and yield of major specialty crops in California. Results suggest that federal crop insurance can change specialty crop growers’ production responses to climate and soil conditions. The moral hazard effect tends to increase the acreage and yield of the specialty crops, whereas the adverse selection effect tends to have the opposite effect. The overall effect of the FCIP on acreage and yield of specialty crops is found to be moderate.
Professor Yong Chen, in a May 2020 paper published in the journal Land Use Policy, develops a behavior-driven agent-based model of exurban land market. The model is used to assess the effectiveness of a development tax on the control of leapfrog development. Acknowledging the stylized fact that land demand decreases while the supply increases along the urban-rural gradient, he shows that a development tax becomes ineffective when it limits the market competition on undeveloped land. The paper concludes that the ineffectiveness is due to the counteracting cost effect and the competition effect.
An August 2019 study in the journal Nature Sustainability, illustrates how ineffective conservation measures may be when they can only be implemented in the wrong months or downstream of where the shortage is occurring, according to the study’s lead author, William Jaeger, a professor in Applied Economics at Oregon State University. The findings can be applied to other river basins and help policymakers make decisions about mitigating drought, Jaeger said. “The results indicate that while the policies are effective at conserving water, they have limited ability to mitigate the shortages because timing and location of conservation responses do not match the timing and location of the shortages,” he said. “It’s a case of a mismatch in terms of where and when.”The study, funded by the National Science Foundation and National Oceanic and Atmospheric Administration, was based on results derived from a computer model called Willamette Envision, which represents the fine-level interactions between the Willamette River Basin’s natural water supply and the human and natural system’s water demands for farms, people, fish, and forests.
Professor JunJie Wu, along with two other authors, published in July 2019 "Energy price shocks, household location patterns and housing crises: Theory and implications" in the journal Energy Economics. The U.S. housing collapse in 2007 is widely blamed for inducing a financial crisis that spread to the real economy and caused a severe and prolonged downturn. This paper develops a model to investigate the role of gasoline price shocks in triggering the housing market collapse and identifies a new channel through which energy price shocks affect the financial market and the macro economy. Results suggest that unanticipated gasoline price shocks increase the cost of work commutes, lower the value of homes away from the city center, and increase foreclosure rates as homeowners either cannot afford mortgage payments amid elevated gas expenditures or seek to abandon underwater homes. The model predicts that gasoline price shocks disproportionately affect suburban households that face greater exposure due to longer commutes and lower incomes. This research also has implications for the political economy of climate change policy. Irrespective of energy market dynamics, policies to mitigate climate change, like gasoline or carbon taxes and renewable fuel standards, raise transportation costs that are borne disproportionately by suburban homeowners. ⠀
Professor Dave Lewis, along with colleagues from Penn State and Wisconsin, published "The Spatial Dynamics of the Economic Impacts of an Aquatic Invasive Species: An Empirical Analysis" in the February 2019 issue of Land Economics. This paper examines how the economic loss from an aquatic species invasion of a freshwater lake is allocated between users of the lake itself (own-lake effect), and users of neighboring lakes that become invaded because the lake is a new source of the invader (spillover effect). The empirical application concerns the Eurasian watermilfoil invasion in the lake-rich landscape of northern Wisconsin. Results suggest that coordinated management across lakes provides its highest economic value in the early years of an invasion, before high-value, high-traffic lakes are invaded, and drops quickly once the invasion claims these lakes.
Associate Professor Christian Langpap, along with Laura Grant from Claremont McKenna College, published "Private Provision of Public Goods by Environmental Groups" in October 2018 in the Proceedings of the National Academy of Sciences (PNAS). Professors Langpap and Grant noted that many environmental nonprofit groups are assumed to provide public goods. However, while an extensive literature examines why donors join and give to nonprofits, none directly tests whether donations actually provide public goods. They examined this question by studying donations to watershed groups and found that their increased presence resulted in lower dissolved oxygen deficiency and higher proportions of swimmable and fishable water bodies. In addition, increased donations to and expenditures by the groups also improved water quality showing that private groups likely played a role in mitigating environmental problems. Overall, the results indicate private provision of a public good by nonprofit organizations.
Professor JunJie Wu, along with two colleagues from China, in May 2018 published "Spatial distribution of nature reserves in China: Driving forces in the past and conservation challenges in the future" in the journal Land Use Policy. The article notes that nature reserves are hubs of biodiversity conservation in China, but their spatial distributions are not in line with the priority set based on biological criteria. This supposition raises some fundamental questions: What caused this discrepancy? How was the spatial distribution of nature reserves determined in China? This paper aims to address these questions using a unique nation-wide county-level database. The results reveal that although ecological factors play a significant role in nature reserve designations, economic considerations appear to be more significant in explaining the spatial distribution of local nature reserves in China. The opportunity cost of land conservation affects both the probability of designation and the amount of land designated for nature reserves in a county, and the effects vary by region, type of nature reserves, and time period of designation. Implications of these results for new nature reserve designations and for sustainable conservation of the existing protected areas are discussed.
OSU Applied Economics faculty members Laurie Houston, Susan Capalbo, and Clark Seavert, along with their OSU colleagues Meghan Dalton, David Bryla, and Ramesh Sagili, published "Specialty fruit production in the Pacific Northwest: adaptation strategies for a changing climate" in April 2018 in the journal Climatic Change. The authors studied the impact of climate change on specialty fruit crops, which represents a substantial portion of the value of agricultural production in the Pacific Northwest. The authors conclude that climate change may threaten water sources, lengthen the dry season, raise temperatures during both the winter chilling period and the growing season, and facilitate the spread of fungal diseases and insects. Such changes have the potential to substantially reduce net returns due to increased input costs and altered yields and product quality. Many management strategies that are already being used to prolong growing seasons in marginal production areas and to improve production and quality in established production regions may also be useful as adaptation strategies under a changing climate. These strategies mostly involve moderating temperatures and controlling or compensating for mismatches between phenology and seasonal weather conditions.
Associate Professor Christian Langpap, along with a colleague from the University of Illinois, published "The Economics of Species Conservation" in April 2018 in the Annual Review of Resource Economics. In this paper, the authors review research in economics on how best to counter the global threat to species extinction (now affecting 1 in 4 species). Normative research has developed useful tools for cost-effectively choosing areas of habitat to protect, and such work has also designed working-lands contracts that can induce efficient quantities and patterns of conservation on private lands. Positive research finds evidence that payments for ecosystem service programs are effective, but legal protections for threatened species have a mixed record of success. Economists have also measured both the nonmarket benefits and the costs of species conservation. Emerging work is tackling the particular challenges to species conservation posed by climate change, the demand for exploiting charismatic megafauna, and global population growth.
Professor John Antle recently published "Methods to Assess Between-system Adaptations to Climate Change: Dryland Wheat Systems in the Pacific Northwest United States" in the February 2018 issue of the journal Agriculture, Ecosystems & Environment. In this paper, the authors propose to extend methods for agricultural impact assessment to study the adaptations that agricultural producers are likely to consider in response to climate change such as the use of different combinations of crop or livestock species and associated changes in management. They conclude that the method used for estimating the productivity of the new system introduces an element of uncertainty into adaptation analysis, in addition to the other data, model and scenario uncertainties.
Assistant Professor Steven Dundas, with co-authors from North Carolina State University and RTI International, recently published a study that provides evidence on the relative economic value of efforts to balance environmental protection with recreation access to public lands. Using recreational data for Cape Hatteras National Seashore, the research shows that the costs to recreational fishing from temporally and spatially varying closures to both vehicle and pedestrian access to portions of the seashore range from $400,000 to $2 million annually. These costs are shown to be substantively lower than potential benefits of protecting nesting shorebirds (piping plovers) and sea turtles. The paper, Recreation Costs of Endangered Species Protection: Evidence from Cape Hatteras National Seashore, is in the January 2018 issue of Marine Resource Economics. A recent news story about this paper can be found here.
Professor Jennifer Alix-Garcia, together with co-authors from the University of New South Wales in Australia and the World Bank, investigates the impact of refugee camps on local populations. The work uses both nighttime lights data -- a proxy for economic activity -- and household surveys to assess whether or not Kakuma refugee camp in northern Kenya has helped or hurt the local pastoral population. The research shows that, on average, local residents benefit from the camp. In fact, a 10% increase in the refugee population is associated with approximately a 5.5% increase in consumption of locals living near the camp. This effects seem to be driven by increases in wage earning opportunities and the possibility of selling agricultural and livestock production to camp residents. The work is in the January 2018 issue of the Journal of Development Economics. Prof. Alix-Garcia recently appeared on the Voice of America radio program South Sudan in Focus to discuss this research (available here, starting at minute 12:25).
Professor Larry Lev and Senior Faculty Research Assistant Laurie Houston were part of a group that published a journal article in January 2018 entitled "Beyond Fresh and Direct: Exploring the Specialty Food Industry as a Market Outlet for Small- and Medium-sized Farms" in Renewable Agriculture and Food Systems. This study investigated the benefits, barriers, and challenges for small- and medium-sized farmers who want to sell products to specialty food manufacturers (SFMs). Their paper analyzed 240 survey responses from dairy, meat, fruit/vegetable/nuts, and grain specialty manufacturers and 60 in-depth interviews of these manufacturers and farmers in California, Minnesota, Wisconsin, Washington, and Oregon. Overall, they found evidence that the specialty food industry is an emerging market channel for small- and medium-sized farms. They also found that to be successful suppliers of SFMs, farmers need to have processes in place to ensure the quality of their products.