This research project assesses the political implications of intra-aquifer heterogeneity in the benefits and costs of optimal groundwater management. We use simulation modeling to predict groundwater extraction regimes under two alternative local decision-making structures and compare these structures to optimal management. Local collective action performs poorly when the intra-aquiferdisparity in the potential gains is large. As a result, local collective action is unlikely to be successful in capturing the largest welfare gains. Individual subregions within a groundwater basin almost always benefit most from political structures whose outcomes diverge from optimal management. The analysis in this paper suggests that there may be regions where large potential gains from optimal management are available, but cannot be realized by the two alternative local political institutions. Thus, there may be a role for State intervention in the local political processes by which local water management decisions are made.

Publications

"Property Rights and Water Transfers: Bargaining Among Multiple Stakeholders" (with Susan Stratton Sayre and Leo K. Simon). Strategic Behavior and the Environment 1(1): 1-29, 2010.

"Local Negotiation with Heterogeneous Groundwater Users" (with Susan Stratton Sayre and Leo K. Simon). Forthcoming in Strategic Behavior and the Environment.

In this paper, we estimated the effects of two shocks to rbST use in the dairy industry using discrete-time duration analysis, a method that has been used frequently by other social scientists but less so by economists. The main advantage to using discrete-time duration analysis to model technology choice is that most technology choice decisions are inherently discrete and therefore more accurately modeled as a repeated series of binary decisions.

In our empirical application, we examined the effects of two shocks on the use of rbST by California dairy farmers. We show that the disadoption rate in 2004 was not statistically different from the disadoption rate in earlier years. This suggests that dairy producers interpreted the rationing imposed by the shortage as an atypical event that did not increase their estimation of the costs and risks associated with rbST use enough to warrant disadoption.

The ban in 2007, however, had a large and positive effect on the disadoption of rbST. The disadoption rate was significantly higher in 2008 than in any other year in whichthe disadoption of rbST was possible. While this result is not surprising, it does indicate that for many producers, the benefits from using rbST were not large enough to encourage producers to seek other buyers for their milk and/or pay the surcharge that processors charge to store and handle rbST-milk separately.

The broad objective of this work is to improve upon zonal approaches to recreation demand modeling. A standard zonal model ignores important aspects of spatial heterogeneity that are inherent in recreation demand contexts. The standard approach aggregates across groups of heterogeneous agents, and models them as homogenous points of origin for demand estimation. The standard approach also ignores that these heterogeneous agents deliberately choose their points of origin, which introduces a source of bias into the estimation. This work has produced a peer-reviewed article that addresses these shortcomings. This article, “A Latent Class Approach to Modeling Endogenous Spatial Sorting in Zonal Recreation Demand Models” (Land Economics86(4):800-816), demonstrates how a latent class count data model can control for unobserved heterogeneity that may lead to spatial sorting of recreationists. Results show that welfare estimates from this model for a southern California wilderness site are substantially smaller than for the standard approach.