VTechWorks Repository :: Browsing by Author "Amacher, Gregory S."

Browsing by Author "Amacher, Gregory S."

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The adoption of consumption technologies under uncertainty: A case of improved stoves in Nepal
Amacher, Gregory S.; Hyde, W. F.; Joshee, B. R. (Seoul, Korea: The Economic Research Institute of Chung-Ang University, 1992)
This paper uses a household model to examine the adoption and efficient use of a consumption technology, improved stoves in Nepal. Improved stoves are a technological substitute for fuelwood. Therefore, they can act as one control on deforestation. Both adoption and efficient use are uncertain events, as is future household income. Our evidence argues that fuelwood and fuelwood substitute prices, the level of stove efficiency, household income, and demographic characteristics indicative of greater information and wealth are the important indicators of adoption and efficiency.
Analysis of Policy Reforms in the New Zealand Forest Manufacturing Sector
Grebner, Donald L. II (Virginia Tech, 1998-04-10)
New Zealand experienced dramatic restructuring programs after the Labor party won the national elections in 1984. Deregulation of price controls, removal of the log export ban, and privatization of public assets were the main shocks to the forest sector. The purpose of this paper is to analyze the impacts of these reforms on wood and paper industry cost, production, and cost efficiency. Unlike previous work, the effects of privatization and deregulation are compared to determine which shock had the most influence on the forest sector. Results show that production decreased, total cost increased, and cost efficiency decreased after deregulation for the sector, and that deregulation was more significant than privatization for the wood and paper sectors. In particular, removal of the log export ban had the greatest impact, while privatization had little effect on industry production and cost. This suggests that countries with comparative advantages in wood processing who implement deregulation or privatization may suffer through a short term period of lower cost efficiency as the economy adjusts to higher input costs in those sectors. In New Zealand's case, the adjustments most likely affecting efficiency have been investments in new technologies, which require time to attain maximum efficiency. The results are contrary to other studies that have predicted increased efficiency as a result of privatization.
Analysis of the Efficiency, Equity, and Adequacy of a Forest Site Value Tax
Costello, Scott Thomas (Virginia Tech, 1997-07-28)
Forest property taxes play an integral role when private landowners make land use and management decisions. Economists often suggest that taxes should be neutral, thus causing no change in land use or management decisions compared to the pre-tax condition. The traditional ad valorem property tax has long been criticized, particularly as it pertains to forestry, because of its distortionary properties and inherent bias against long-rotation investments. Alternatives to the traditional forest property tax include current use assessment, productivity, yield, and site value taxes. The site value tax is a property tax on the market value of bare land only, exempting improvements. In theory, the site value tax has been championed as the only neutral property tax alternative; however, in actual application, a forest site value tax may prove to be non-neutral and, by certain measures, inequitable. The degree of the tax's neutrality can be linked to the method of tax administration and the ability of assessors to accurately determine bare land market values for a wide range of site qualities. This paper reviews literature on forest property tax alternatives and theoretically examines the efficiency of an applied forest site value tax. The adequacy and equity of a proposed forest site value tax are examined in detail and compared for two study areas: Western Oregon and Alabama; in light of local governmental budget constraints. Although the site value tax may represent a less-distortional vehicle for collecting local taxes, it is unlikely to be politically or administratively feasible. Also, given the existence of other distortions in the economy, a site value tax may not prove to be the most efficient tax in application, despite its neutral properties.
Assessing the extent and drivers of forest plantation establishment in Andhra Pradesh
Wynne, Randolph H.; Thomas, Valerie A.; Gundimeda, Haripriya; Amacher, Gregory S.; Cobourn, Kelly M.; Köhlin, Gunnar (2017-07)
Building resilience in cropping systems of the Central Plateau of Haiti
Thompson, Thomas L.; Kennedy, Nathan; Thomason, Wade E.; Amacher, Gregory S.; Hodges, Steven C. (2013)
This presentation provides information on a project intended to improve resilience through conservation agriculture production systems in the Central Plateau of Haiti. It discusses results from a baseline survey and from agronomic experiments. Analysis includes derivation of Cobb-Douglass production functions based on results from the household survey.
China's Paper Industry: Growth and Environmental Policy during Economic Reform
Xu, Jintao (Virginia Tech, 1999-07-07)
This dissertation examines the performance of China's pulp and paper industry under environmental regulations, and reflects on the implementation of the regulations, and especially on market-based instruments. The dissertation includes two empirical chapters: one uses a frontier production function model to examine the impact of China's environmental policy on paper mills' environmental as well as efficiency performance; the other derives shadow prices for pollutants for the same group of mills, based on a distance function model, to examine the efficiency performance of current pollution control policy and the degree of regional variation in the policy enforcement. The basic conclusion from the first empirical chapter is that the economic instrument-pollution levy system-can be an effective tool in inducing polluting mills to abate their pollution, and there is no strong evidence that the instrument adversely affected the mills' efficiency performance. The reason that the pollution problem is not lessening over time can be largely attributed to allocative inefficiency and regional disparity in policy enforcement, as is demonstrated by the second empirical chapter. These results should point future policy in the direction of better enforcement and/or the trial of a tradable permit system.
Cooperative Management of Invasive Species: A Dynamic Nash Bargaining Approach
Cobourn, Kelly M.; Amacher, Gregory S.; Haight, Robert G. (2019-04)
We use a Nash bargaining framework to examine scope for bargaining in invasive species problems where spread depends on the employment of costly controls. Municipalities bargain over a transfer payment that slows spread but requires an infested municipality to forgo nonmarket benefits from the host species. We find that when the uninfested municipality has a relative bargaining power advantage, bargaining may attain the first-best solution. However, in many cases a short-term bargaining agreement is unlikely to succeed, which suggests a role for higher levels of government to facilitate long-term agreements even when the details are left to municipalities to negotiate.
Cost and rents to logging in the Brazilian Amazon
Bauch, Simone Carolina (Virginia Tech, 2002-05-10)
The logging industry of the Amazon is a topic that has received little attention in the literature, beyond specific single firm case studies. This has not allowed estimation of cost and production functions that can be used to predict changes in the industry in response to external market factors or government policies. Cost functions and rents are very important to characterize the dynamics of industry behavior, as well as providing important information for future policies. This study relies on a survey of 527 firms to estimate harvest, transportation, and milling cost functions for the logging industry in the Brazilian Amazon, finding variables such as labor cost, distance from the forest to the sawmill, equipment and frontier type to significantly affect the total and marginal cost of each activity. Rents are also estimated for different sampled milling centers, and a cost minimizing mathematical programming model is presented that explains the advance of the logging frontier in Brazil.
Cost share payment and willingness to participate in Virginia's Pine Bark Beetle Prevention Program
Watson, Adam (Virginia Tech, 2011-05-04)
Forest management practices which reduce southern pine beetle (SPB) risk benefit not only the landowners who perform them, but all those who draw benefits from southern pine forests in Virginia, especially other forest owners within the same region. One such management practice is pre-commercial thinning (PCT), which is particularly unattractive to non-industrial private forest (NIPF) landowners because of the substantial costs and delayed financial returns involved. Since the benefits to society generated by PCT are not fully realized by the individuals who might implement it, there may be a market externality in which PCT is underprovided across the landscape. The Pine Bark Beetle Prevention Program (PBBPP) has the potential to correct this externality by reimbursing a portion of the costs of PCT for landowners who qualify. However, cost share incentives have been criticized for being ineffectual on the basis that landowners substitute publicly funded reimbursement for private investment, without altering their management practices. To investigate the effect of the PBBPP cost share for PCT, a survey was sent to 1,200 NIPF landowners in seven counties across the Piedmont and Coastal Plain physiographic regions of Virginia, where southern pine is prevalent and SPB hazard is a relevant concern. To measure willingness to participate in the program, a referendum style question was used in which the offered cost share ranged from 20% to 90%. Results of discrete choice models estimated from survey data indicate that cost sharing has a significant, positive effect on willingness to participate overall, though increasing reimbursement above 60% is unlikely to affect participation. Some landowners are not responsive or are less responsive to cost sharing due to personal and property characteristics.
Costs of Reclamation on Southern Appalachian Coal Mines: A cost-effectiveness analysis for reforestation versus hayland/pasture reclamation
Baker, Katherine (Virginia Tech, 2008-04-24)
The two most common options for post-mining land uses in the southern Appalachians are forestry or hayland/pasture. Hayland/pasture has become the predominant reclamation type due to ease of establishment and strict regulation standards requiring quick and dense erosion control by herbaceous cover. Recently, more landowners have become interested in returning mined land to an economically valuable post-mining land use, such as forestry. Landowners are becoming more aware of the possible future profits from timber stand harvests, as well as other benefits (monetary and aesthetic) derived from a forestry post-mining land use. Although hayland/pasture lands can provide economic returns through forage and grazing rents, many post-mining pasture lands are left fallow, with no economic returns being gained. Current research has provided the biological and technical information needed to reclaim mine lands to productive forest stands and achieve bond release. Cost information though has been lacking, or variable at best. The purpose of this study is to understand the processes of reclamation for both forestry and hayland/pasture, and calculate detailed cost estimates for both reclamation types. Total costs of reclamation are determined using a cost engineering method, in conjunction with Office of Surface Mining Regulation and Enforcement bond calculation worksheets. In Kentucky, Maryland, Pennsylvania, Tennessee, Virginia, and West Virginia, hayland/pasture reclamation is more costly on a per acre basis. The cost of hayland/pasture reclamation is greater than the cost of forestry reclamation by $140 per acre to $350 per acre. In Ohio, forestry reclamation is more expensive by nearly $60 per acre. Grading costs are four times as costly for hayland/pasture reclamation, as compared to forestry reclamation. Pasture reclamation requires more grading passes to prepare the seedbed, requiring four passes. Forestry reclamation typically involves only grading the site with one dozer pass to prevent compaction of minesoils which inhibits tree growth. Hyrdoseeding costs are also higher for hayland/pasture reclamation due to higher application rates of fertilizer and herbaceous seed. The hydroseeding costs make up the largest percentage of the total per acre cost for both forestry and hayland/pasture reclamation. Lime and mulch costs are equal for both reclamation types and are included in the hydroseeding equation. Due to the increased grading costs and higher hydroseeding costs, hayland/pasture reclamation is more expensive for all states analyzed in the Appalachians, other than Ohio. These cost estimates can provide useful tools for mine operators and landowners to determine the most economical and suitable post-mining land use for their individual property.
Drivers of Forest Plantation Establishment in Andhra Pradesh
Wynne, Randolph H.; Thomas, Valerie A.; Gundimeda, Haripriya; Amacher, Gregory S.; Cobourn, Kelly M.; Köhlin, Gunnar (2018-05-30)
Conclusions
Plantation forestry rapidly expanding in Asia

Small spatial extent and rapid harvest-regeneration cycle present interesting — but resolvable — remote sensing challenges

Understanding the drivers and ramifications of these new trees outside forests vital
Economic Tools to Improve Forest Practices' Outcomes
Junqueira Sartori, Pedro (Virginia Tech, 2023-09-01)
This PhD dissertation work delves into critical issues within the forestry business related to carbon sequestration, land value maximization and climate change vulnerability. The study proposes different tools to enhance the efficiency and outcomes of forest practices. Chapter two involves an enhanced forest rotation deferral methodology for carbon dioxide sequestration, focusing on the forest's final product destination passed the Faustmann optimal rotation age. Instead of giving the same value for pulp wood and saw timber, the research acknowledges the benefit of increased carbon dioxide stored in saw timber materials. To drive landowners to the socially optimum rotation age, where the marginal benefits of extended carbon storage equal the private marginal cost of postponing forest rotation, an incentive based mechanism is proposed, using subsidies. Through sensitivity analysis on the underlying assumptions, the socially optimal rotation is consistently greater than the currently applied one-year harvesting deferral, and smaller than longer extensions, such as 20 years deferred rotations. In chapter three, a novel approach to design Streamside Management Zones widths that vary according to different landscape characteristics is presented, as opposed to the constant command and control width currently used in Virginia. This adaptive approach allows landowners to maximize land value, while ensuring water quality protection. To determine the sediment retention equation as a function of SMZ slope, width, and soil texture, we use data derived from the Watershed Erosion Prediction Project. By simulating different regulatory constraints concerning accepted sediment delivery, the study shows the tradeoff between water quality and land expectation value through the changes in the opportunity cost of Streamside Management Zones. Lastly, chapter four centers on a dataset collected in India about tree planting species choice followed by a second model that incorporates socio-economic, as well as revealed preference management choices, and tree planting species as explanatory variables in a binary crop loss model. The findings reveal that tree planting, except for fruit trees, compared to agricultural crops, diminishes the household's probability of facing losses due to climate change, extreme weather events and pest attacks. Specifically, there is a 14.4% reduction in the probability of facing a loss when planting Eucalypt and Casuarina trees, a 7.6% reduction when planting palm trees, and 13.5% reduction when planting multiple trees, which evidences how trees are less vulnerable. Throughout this dissertation, the interdisciplinary research uses rigorous methodologies, comprehensive data analysis, and environmental economics theoretical foundation, culminating in valuable insights and potential policy recommendations to enhance forest practices in environmental challenging times.
Economic Viability of Woody Bioenergy Cropping for Surface Mine Reclamation
Leveroos, Maura K. (Virginia Tech, 2013-06-07)
Planting woody biomass for energy production can be used as a mine reclamation procedure to satisfy the Surface Mining Control and Reclamation Act of 1977 (SMCRA) and provide renewable energy for the United States. This study examines the economic viability of bioenergy production on previously mined lands using multiple hardwood species and treatments. Five species were planted at two densities; one-half of the trees were fertilized in year two. Height and diameter of the trees were measured annually for five years; the first three years by cooperating researchers at Virginia Tech, the last two years specifically for this report. Current and predicted mass of the species, effects of planting density and fertilizer application, and the land expectation value (LEV) of each treatment were summarized. A sensitivity analysis was conducted to determine how changes in production costs, stumpage price, rotation length, and interest rate affect the economic feasibility of bioenergy production. Renewable energy and mine reclamation policies were investigated and it was determined that woody bioenergy can be planted as a mine reclamation procedure and may receive financial incentives. Production cost appears to have the largest impact on LEV and is often the difference between positive and negative returns for the landowner. The extra cost of fertilization and high density planting do not increase LEV; the unfertilized, low density treatments have the best LEV in all examined scenarios. In general, bioenergy was found to be economically viable as a mine reclamation procedure only in limited circumstances. In low cost, high price scenarios, bioenergy crops could have the potential to reforest both active and abandoned mine lands throughout southern Appalachia.
The Economics of Smallholder Households in Central Haiti
Kennedy, Nathan S. (Virginia Tech, 2015-05-14)
Smallholder households in Haiti face many natural resource management challenges. Agricultural production occurs on deforested hillsides prone to erosion. Charcoal is in an important source of income, and woodfuel stocks are often over-exploited. Donor-funded projects and non- governmental organizations have made large investments in programs that promote soil conservation practices and reforestation. Despite the magnitude of the problems and the amount invested, there are relatively few economic analyses of the long-term adoption of soil conservation practices and woodfuel management. This dissertation uses an economics approach to examine the adoption of conservation practices and the management of woodfuel resources in Central Haiti using cross-sectional data covering 600 households. The results show that plot and household characteristics have different effects on adoption across different classes of soil practices, particularly with regard to perceived soil quality, market access, and household health status. The results also provide evidence of the management of charcoal woodfuel stocks on private land. These findings inform the design and targeting of new programs related to soil conservation and reforestation in Haiti and other developing countries.
Effects of Shifting Populations and Preferences on Nonindustrial Landowner Behavior: An Example from Virginia
Conway, M. Christine (Virginia Tech, 1998-09-11)
The study was undertaken in response to a prediction by the Virginia Department of Forestry (VDOF) that current harvest levels cannot be sustained into the future given an increasing growth to removal insufficiency throughout the state of Virginia. The purpose of the study is to determine how market signals, land and owner characteristics, and owner preferences affect landowners' decisions concerning their forestland. Particular emphasis is placed on the effects of absenteeism and land fragmentation on landowner behavior. Such information is important for targeting policies that will successfully maintain commercial timber levels throughout the state.
The Efficiency of Community Forests: Successful and Unsuccessful Examples From Nepal
Dangi, Resham B. (Virginia Tech, 2000-04-04)
This study suggests that transfer of State forests to the local communities is the least cost policy option to improve prevailing deforestation problem in Nepal. However, there are few problems at operational, institutional, and policy levels, which are restricting community forest (CF) transformation. The critical review of seven representative case studies and modern forest policy of Nepal identifies following important issues in CF transformation in Nepal. They are low marginal flexibility, incomplete and uncertain property rights transfer, equity problem, specific demand adjustment problem, and inconsistent forest policy. This work recommends for amendment of modern CF policy guidelines to reduce CF transformation costs, increase present value of future returns, and reduce present value of enforcement costs. These amendments will be effective to improve prevailing CF work situation in Nepal. Availability
Essays in Game Theory and Forest Economics
Wang, Haoyu (Virginia Tech, 2022-08-18)
This dissertation consists of three essays in theoretical and applied microeconomics: the first essay is in cooperative game theory, and the second and third essays relate to forest economics. The first chapter studies a class of cooperative games dubbed ``r-essential games''. Cooperative game theory has proposed different notions of powerful players. For example, big-boss games (Muto et al., 1988) and clan games (Potters et al., 1989) are particular cases of veto games (Bahel, 2016). The first chapter extends these veto games by assuming that there is a given subset of powerful (or essential) players, but only a few (as opposed to all) essential players are required for a coalition to have a positive value. The resulting games, which are called r-essential games, encompass convex games (Shapley, 1971) and veto games. We show that r-essential games have a nonempty core. We give a recursive description of the core. Moreover, it is shown that the core and the bargaining set are equivalent for every r-essential game. An application to networks is provided. The second chapter employs a two-principal, one-agent model to estimate the social cost of fiscal federalism in China's northeast native forests. China's key forested region is located in the northeast and consists of state forest enterprises which manage forest harvesting and reforestation. Deforestation is a major problem there and has resulted in several central government reforms. We develop a framework for assessing the social cost of state forest enterprise deforestation. We first develop a two-principal, one-agent model that fits the federalistic organization of state forests, in that state forest managers make (potentially hidden) decisions under influence of provincial and central government policies. This model is used to quantify the social cost of these hidden actions. We then use panel data from a survey conducted by Peking University to compute social welfare losses and to formally identify the main factors in these costs. A sensitivity analysis shows that, interestingly, command and control through lower harvesting limits and a more accurate monitoring system are more important to lowering social welfare losses than conventional incentives targeting the wages of forest managers. Through regression analysis we also find that the more remote areas with a higher percentage of mature natural forests are the ones that will always have the highest social welfare losses. The third chapter studies the problem of choosing a rotation under uncertain future ecosystem values and timber prices. This problem is nearly as old as the field of forest economics itself. A forest owner faces various uncertainties caused by climate change and market shocks, due to its long-term nature of production and the joint production of interrelated timber and amenity (non-harvesting) benefit streams. The vast literature in stochastic rotation problems simply assumes a known probability distribution for whatever parameter is uncertain, but this type of assumption may lead to misspecification of a rotation decision model if a forest owner has no such information. We study a more relevant question of how to choose rotation ages when there is pure (or Knightian) uncertainty, in that the forest owner does not know distributional features of parameters and further can be averse to this type of information deficit. This chapter is the first to investigate pure uncertainty in amenity benefit streams and is also the first to analytically solve a stochastic rotation problem under pure uncertainty in either amenity streams or market prices. We use robust methods developed in macroeconomics that are particularly suited to forest capital investment problem, but with important differences owing to the nature of forest goods production. The results show that newer models suggesting rotation ages could be longer under volatile parameter distributions do not hold generally when pure uncertainty and forest owner uncertainty aversion is considered. Rather, the earlier literature showing faster or greater harvesting with increases in risk under risk neutrality may actually be a more general result than current literature supposes. In particular, we find that a landowner tends to harvest more when his degree of uncertainty aversion is higher and the model is misspecified by assumption, or when the volatility of an uncertain process is higher. These situations tend to magnify model misspecification costs, especially because the forest manager always assumes the worst case will happen when there is uncertainty. This implies the decision maker is pessimistic in the sense that he or she is always trying to maximize the utility under the worst possible state of nature (the lowest amenity benefit or the lowest timber price). Whether landowners are in fact uncertainty averse and assume the worst case in their decisions remains to be empirically investigated, but our work suggests it is an important question that must be answered.
Essays on Labor Allocation by Small Scale Farmers in the Brazilian Amazon
Lima, Eirivelthon Santos (Virginia Tech, 2020-03-18)
Human health is frequently omitted from household-level studies on agricultural productivity, land-use choices, and forest degradation and deforestation. Intuition, however, suggests that it could be an extremely important factor. This dissertation is built on three essays that use household survey data from the Brazilian Amazon to examine the conditions under which human health and other critical market conditions are important factors in determining household agriculture production choices and efficiency. Essay I (Chapter 2) examines how health affects the labor allocation and production choices of migrant smallholders in the Brazilian Amazon. We show that the impacts of illness on household decisions depend critically on labor market function in the rural areas of the tropics. Furthermore, results from a formal statistical test of the labor markets shows that they do not work well, in other words are incomplete or thin, in the study area. These results are important both in specification of future smallholder household economic models and in targeting policies to better alleviate poverty and encourage more sustainable use of forest and land resources in similar tropical regions. Essay II (Chapter 3) investigates the role of health as a productive input and non-input factor of production. By using a non-neutral stochastic production approach, the impact of health is decomposed into direct effect on the production function and indirect effects on technical efficiency. The finding of the essay suggests that poor health has significant negative impacts on rural household production. The most important policy implication is that careful designing of agriculture development and rural settlements programs is important, and the provision of health care should be tied to these development projects. Essay III (Chapter 4) examines the demand for labor applied to land clearing, staple food production, livestock, working off-farm, and time taking care of sick people in the household. Specifically the empirical application examines the impact of disease on labor allocation, accounting for time lost by households taking care of sick members as a non-productive activity. Disease plays an important role in household decisions because farm activities are performed inefficiently by sick households and changes in household labor efficiency brings about a change in the relative price of competing uses for a household's time. Chapter 5 provides a summary and general conclusion of the work, and then provides comments on policy design and recommendations for further studies. In summary, the combined results of these studies show that both health condition and the quality of labor markets have significant interacting impacts on the labor allocation decisions by smallholders with accompanying welfare and deforestation implications.
Essays on Risk and Uncertainty in Greenhouse Gas Trading Markets
Grover, Mansi (Virginia Tech, 2005-09-07)
A large number of concepts related to carbon offset trading policy are currently being discussed such as baseline, leakage, permanence, monitoring, verification, enforcement, financial feasibility, and third party verification. Cutting across these concepts are a variety of risks and uncertainties. These risks play a major role in developing effective market designs that achieve aggregate emission caps while encouraging market participation and investment in carbon reduction activities. What are the risks associated with carbon offset policy and how do such risks affect incentives for investing in carbon offsets? A literature review of carbon trading risks is developed. Risks associated with carbon offsets policy can be classified into three major categories: institutional/policy, project level and measurement risks. Institutional/policy risks are related to uncertainties surrounding the future policy decisions and the institutional arrangements established to define baselines, stipulate monitoring/enforcement requirements, and define and estimate leakage. Baseline estimates are necessary to calculate the net carbon reduction of a program or project. Monitoring/enforcement risk is associated with the regulators' ability to detect whether the promised carbon sequestration activities are undertaken. Leakage occurs when carbon sequestration at one site encourages increase in carbon emissions on some other site. Project risk refers to non-performance of a carbon sequestration project in terms of not achieving the requisite target of carbon sequestration. Project risk includes physical risk and financial risk. Physical risks are associated with unexpected carbon emissions due to natural hazards or events such as fire, or hurricanes or changes in the rate of sequestration, which depend on weather and pests. Landowners will not participate in carbon sequestration programs if they expect to incur financial losses by participating. Measurement risk arises because it is difficult to measure actual rates of carbon sequestered due to spatial and temporal heterogeneity of carbon present in agricultural and forest production. Forests are a principal carbon "sink" for sequestering carbon from the atmosphere. The provision of trading emission rights under the Kyoto Protocol will provide forest landowners the opportunity to reap financial gains from sequestering carbon and trading rights to emit carbon in carbon permit markets. However, landowners may be liable for repaying all or some of the proceeds received for sequestering carbon if stored carbon is released during the contract period. Hurricane damage to forests may cause extensive mortality and subsequent emission of carbon dioxide from decomposing biomass. Such liabilities may reduce landowners' incentives to sequester carbon. This research evaluates incentives of an individual forest landowner for sequestering and trading carbon, given the risk of carbon loss from hurricanes. Results of our simulation model reveal that the effect of hurricane risk on landowners' behavior depends on the variability of returns from carbon and timber and the ability of landowners to mitigate risk by diversifying forest holdings across regions with different sequestration rates and different hurricane strike probabilities. Some risk mitigation strategy might be required to create the necessary incentives for landowner participation especially in hurricane prone regions. We evaluate incentives of forest landowners for sequestering and trading carbon, given the risk of carbon loss from hurricanes, and an opportunity to insure their losses. Results of simulation model reveal that the effect of hurricane risk depends on the variability of returns from carbon and timber and landowners' ability to mitigate risk by diversifying forest holdings across regions or transferring risk by purchasing insurance. Although, landowner can spread the risk of carbon loss by diversifying into different regions, insurance has a role to play over and above diversification by reducing landowners' risk (variance) from forestry investments for sequestration and timber purposes, even when timber losses are not insured.
Essays on the Economics of Climate Change, Water, and Agriculture
Ji, Xinde (Virginia Tech, 2018-08-30)
In an era of global-scale climate change, agricultural production faces a unique challenge due to its reliance on stochastic natural endowments, including temperature, precipitation, and water availability for irrigation. This dissertation presents a series of essays to examine how agricultural producers react and adapt to challenges presented by climate change and scarce irrigation water allocated through the prior appropriation doctrine. The dissertation approaches the problem from three distinct perspectives: institutional differences, climate and water availability, as well as producers' expectation on future endowments. Chapter 2 presents an institutional perspective, in which I investigate how different water allocation mechanisms within the prior appropriation doctrine result in differences in producers' crop allocation decisions. I find that water users in irrigation districts are able to plant more water-intensive crops than farmers outside irrigation districts. Chapter 3 presents the interaction between nature and human systems, in which I examine how the physiological complementarity of temperature and water availability diffuses from crop yield (at the intensive margin) to crop allocation strategies (at the extensive margin). Using a theoretical model I show that the observed complementarity reflects a combination of two mechanisms: yield impact through physiological complementarity, and adaptation response through shifting crop allocation patterns. Using an empirical model, I find that farmers adapt to changing climate conditions by growing more profitable crop mixes when presented with more growing degree-days (GDD), precipitation and groundwater access. Chapter 4 presents a behavioral perspective, in which I test how producers' expectation formation processes lead to short term over-adjustments to weather and water availability fluctuations. Using a fixed-effect regression on lagged weather and water realizations, I find that agricultural producers engage in a combination of cognitive biases, including the availability heuristic and the reinforcement strategy. Adopting these alternative learning mechanisms causes farmers to significantly over-react to more recent fluctuations in weather and water availability when making ex ante acreage and crop allocation decisions.

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