Estimating demand for environmental goods and services, now and later

Parthum, Bryan Michael

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https://hdl.handle.net/2142/108414 Copy

Description

Title

Estimating demand for environmental goods and services, now and later

Author(s)

Parthum, Bryan Michael

Issue Date

2020-05-15

Director of Research (if dissertation) or Advisor (if thesis)

Ando, Amy W

Doctoral Committee Chair(s)

Ando, Amy W

Committee Member(s)

• Moeltner, Klaus
• Gramig, Ben
• Christensen, Peter

Department of Study

Agr & Consumer Economics

Discipline

Agricultural & Applied Econ

Degree Granting Institution

University of Illinois at Urbana-Champaign

Degree Name

Ph.D.

Degree Level

Dissertation

Keyword(s)

• Environmental Economics
• nonmarket valuation
• outdoor recreation
• climate change
• snow sports
• surface water quality

Abstract

This dissertation presents three papers that estimate the demand for environmental goods and services. Chapter 1 begins with a brief overview of the practice of nonmarket valuation, with discussion of previous applications and the methods that I advance in the subsequent chapters. I also provide a common nomenclature for continuity in understanding, the underlying intuition and motivation, and discussion of the results throughout. In chapter 2, I examine the behavioral response of winter recreationists to marginal changes in mountain snowpack. I make three primary contributions in this chapter: 1) I develop a new method to estimate elasticities for climate amenities by matching the spatial and temporal variation in the level of the amenity with the frequency of related market transactions; 2) I derive state-specific snowpack elasticities for all major markets across the United States and find significant heterogeneity in the behavioral response across states; and 3) I estimate year-to-year variation in the recreation revenue from snowpack under current and future climate scenarios. I predict that resort markets could face reductions in local snow-related revenue of -40\% to -80\%, almost twice as large as previous estimates suggest. In chapter 3, I extend the analysis from the previous chapter to estimate utility functions for winter recreationists in the United States. I make two primary contributions in this chapter: 1) I estimate the marginal willingness to pay (MWTP) for mountain snowpack at the national and regional levels; and 2) I construct a matrix of substitution elasticities between resort markets. Both contributions invoke random utility maximization to estimate structural parameters in the utility functions of alpine skiers. For the first contribution (1), I maintain trip-level data to estimate marginal utilities and subsequent MWTP. I address price endogeneity concerns using an instrumental variables approach. For the second contribution (2), I aggregate the trip-level data to market-level and calculate daily market shares. This allows me to recover substitution patterns that provide insight into how skiers move across markets based on marginal changes in mountain snowpack. Each of these are important for understanding consumer welfare in the alpine skiing market and the implications under a changing climate. In chapter 4, I examine preferences for surface water quality and quantify some overlooked benefits of nutrient reductions in the Mississippi River Basin. Improvements in local surface water quality in the Mississippi River Basin (MRB) can contribute to the regional environmental goals of reducing hypoxia in the Gulf of Mexico. To inform estimates of the benefits of water quality policy, I use a choice experiment survey in a typical sub-watershed of the MRB to estimate willingness to pay for local environmental improvements and helping to reduce hypoxia far downstream. I find that residents place large values on reduced local algal blooms, improved local fish populations and diversity, and meeting local commitments to help with the regional environmental problem. I conclude my analysis in chapter 5 by providing a clear summary of my findings and why they are important. I discuss some of the possible implications for the benefits that I quantify and list a few examples of how they can be used when generating climate and environmental policy.

Graduation Semester

2020-08

Type of Resource

Thesis

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http://hdl.handle.net/2142/108414

Copyright and License Information

Copyright 2020 Bryan Parthum

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