Job Market Paper
Additionality and Asymmetric Information in Environmental Markets: Evidence from Conservation Auctions with Karl M. Aspelund. January 2024.
Market mechanisms aim to deliver environmental services at low cost. However, this objective is undermined by participants whose conservation actions are not marginal to the incentive — or “additional” — as the lowest cost providers of environmental services may not be the highest social value. We investigate this potential market failure in the world’s largest auction mechanism for ecosystem services, the Conservation Reserve Program, with a dataset linking bids in the program’s scoring auction to satellite-derived land use. We use a regression discontinuity design to show that three of four marginal winners of the auction are not additional. Moreover, we find that the heterogeneity in counterfactual land use introduces adverse selection in the market. We then develop and estimate a joint model of multi-dimensional bidding and land use to quantify the implications of this market failure for the performance of environmental procurement mechanisms and competitive offset markets. We design alternative auctions with scoring rules that incorporate the expected impact of the auction on bidders’ land use. These auctions increase efficiency by using bids and observed characteristics to select participants based on both costs and expected additionality.
Working Papers
Waiting or Paying for Healthcare: Evidence from the Veterans Health Administration. October 2023.
The Effects of Floodplain Regulation on Housing Markets with Abigail Ostriker. May 2024.
We investigate the effects of regulations designed to correct a wedge between privately- and socially-optimal construction in areas at risk of flooding in Florida. Using a spatial regression discontinuity around regulatory boundaries and an event study around the policy’s introduction, we document that floodplain regulation reduces new construction in high-risk areas and mitigates damages at homes constructed under flood-safe building standards. Embedding these effects in a model of the housing market, we find the policy reduces damages to the socially-efficient level, but incurs higher costs than a first-best corrective tax. Improved targeting of the existing policy achieves 94% of first-best welfare gains, or $7,567 per newly-constructed house.