Spatial processes in environmental economics: empirics and theory

Economic activities are fundamentally influenced by their location in space, which determines the physical and natural environment in which they take place. Likewise, location defines the social context of economic activity prescribing the particular laws, regulations and social norms to which it should conform. Moreover, spatial location defines proximity, which shapes the costs of accessing factor inputs, product markets and other economic and social institutions. In fact, spatial location mediates most forms of interaction, intended and unintended, that may arise from communication and connections between economic agents. These spatial processes have important implications for estimation, policy evaluation and prediction in models of economic activity. This thesis is comprised of two parts. Part I presents a broad range of issues that arise in estimation due to space and frames these as general spatial omitted variables. I explore the use of semi-parametric estimators to identify the parameters of interest in this general model and derive identification conditions for fixed and local adaptive spatial smoothing estimators. The properties of these estimators are contrasted to OLS and spatial econometric estimators. Part II addresses issues in policy evaluation and prediction. I derive an equilibrium sorting model with endogenous tenure choice that can be used to evaluate the general equilibrium welfare effects of policies that affect local environmental quality. Using a series of simulations, motivated by a real world policy application, I contrast the welfare changes derived under this model to a conventional static approach. By allowing for rental and purchase markets the model I develop provides a far richer characterisation of the complex adjustments that propagate through the property market following policy changes and the contrary impact such policies can have upon renters and owners. The usefulness of the model for applied policy analysis is demonstrated through two applications: The Polegate Bypass and Mortgage Interest Deduction reform.

Name dc:type.qualificationname

phd

Level dc:type.qualificationlevel

doctoral

Grantor dc:publisher.institution

University of East Anglia

Year dc:date.issued

2012

Author dc:creator

• Binner, Amy

Language dc:language

en