Essays in Environmental Economics

Public initiative and referendum voting outcomes provide an opportune setting in which to study the demand for publicly provided goods and services, such as environmental quality and public education. In the first essay, I use census block group level voting outcomes on California statewide ballot propositions from 2006 to 2012 to test whether the relationship between voter support and income depends on a proposition's fiscal implications or the local availability of private substitutes. Support is modestly increasing in income when the proposition is associated with a regulatory change in the context of environmental protection. When propositions are tax or bond-funded, however, I find evidence of a convex or U-shaped relationship between median income and the share of votes in favor, consistent with the combined effects of a low tax burden on poor households and a low marginal utility of wealth among rich households. In the context of public education funding, I further find that the positive marginal effect of income at high income levels is moderated in block groups with greater availability of private substitutes, namely a greater density of nearby private schools./nIndividuals can express their preferences for public goods, and environmental protection in particular, both as voters by supporting regulation or as consumers by choosing favorable alternatives, thus providing a unique opportunity to compare consumer and voter behavior within the same individual and regarding the same issue. In the second essay, I examine the relationship between willingness to pay a premium for products that avoid a controversial technology associated with environmental risks or externalities, with willingness to vote in favor of a ban or mandatory labeling of the technology. Based on a survey on genetically modified food, I find that the majority of respondents make consumer and voter choices that can be explained by a standard utility maximization framework. However, certain respondent characteristics are correlated with inconsistent choice patterns. In particular, low-income voters appear to be overly supportive of regulation relative to their private willingness to pay. Voters who are uncertain about the safety of genetically modified food also tend to be more in favor of mandatory labeling than their consumer choices would imply./nWhile the first two essays consider the relationship between income and demand for environmental protection at a micro level, there are also much broader implications of this relationship. At the country level, higher GDP is often associated with stricter pollution regulation, which may imply a disproportionate amount of production of pollution-intensive goods in less wealthy countries. The hypothesis that countries with relatively strict pollution regulation will be more likely to import pollution intensive goods from countries with weaker or absent regulation is intuitively appealing and has found moderate support in a number of empirical studies. While these studies focus on the regulation of manufacturing industries, the underlying theoretical argument applies equally to the agricultural sector. The third essay assesses whether cross-country differences in pesticide regulation can induce such "pollution haven'' effects. In particular, I estimate the impact of the international phaseout of methyl bromide on trade flows in agricultural products. I find robust evidence that cross-country differences in allowed methyl bromide usage affect trade flows, and show that the effect varies in magnitude and significance across commodities, largely in line with their baseline reliance on MeBr. The results do not suggest that countries granted exemptions from the phaseout for particular commodities, on the basis of such reliance, gained an unfair competitive advantage.

Advisor: Zilberman, David