Year: 2014
Type: dissertation
Abstract: A canonical example in economics of the difference between marginal and total value is the diamond-water paradox.The high price of diamonds is derived from their rarity; whereas the price of water is low due to its abundance, even though it is essential to sustain human life.Scarcity, rather than abundance, better characterizes water availability for many people and this dissertation studies how applied economic principles can be utilized to manage water resources.The first chapter estimate the costs of water volatility in the agricultural sector through a hedonic analysis of heterogeneous water rights.Security for water rights is capitalized into the value of agricultural land, which informs the magnitude and distributional welfare effects of droughts.Tests for an endogenous changepoint fails find a time-varying price premium, indicating that the costs of increased water volatility due to climate change are not manifested in agricultural property markets.The second and third chapters focus on economic and behavioral incentives in urban municipal water demand.Chapter 2 presents a disaggregated model of water demand to separately estimate intensive and extensive margin demand elasticity.Identification is achieved through a novel method merging remotely sensed satellite data on vegetative cover with water metering records.The time series of vegetative cover captures changes in landscape over time and identifies the extensive margin elasticity -a parameter that has only been estimated implicitly through the difference in short run and long run demand.Households that maintain green lawns are less responsive to prices
Author: Daniel A. Brent
Language: English
Subfield: Water Science and Technology
Field: Environmental Science
Domain: Physical Sciences
Open Access status: green
OpenAlex ID: W2598184370