Essays on environmental productivity

Graduation date: 2010Presentation date: 2010-04-30The following three essays explore the use of the directional output distance\ud function (Chambers et al., 1996), an economic model originally developed to\ud measure efficiency and productivity for multi-input and multi-output production\ud processes, to assess performance for multi-attributed environmental\ud processes.\ud The first essay illustrates the use of the directional output distance\ud function to construct environmental indices. This model can be used to\ud aggregate multiple environmental attributes into one measure of performance\ud (distance to the frontier) just as an environmental index seeks to\ud combine multiple attributes into one composite measure of performance. A\ud nonparametric directional output distance function is estimated for a set\ud of biological indicators that were collected to assess stream condition as\ud part of a national study conducted by the U.S. Environmental Protection\ud Agency (EPA). Modeling these indicators as outputs, the directional output\ud distance function yields a similar measure of performance to the existing\ud EPA index for this data.\ud The second essay uses the directional output distance function to derive\ud estimates of marginal performance for each of the biological indicators\ud from the first essay, where marginal performance is defined as the degree\ud to which increasing each of the indicators reduces an observation's distance\ud to the output frontier. The directional output distance function is estimated\ud parametrically, using the quadratic form. The resulting estimates of\ud marginal performance are then used to develop a metric-weighting scheme\ud that incorporates each metric's marginal contribution to performance, at\ud each site, and to then construct an individually-weighted version of the\ud original equally-weighted EPA index.\ud The third essay uses the directional output distance function to derive\ud shadow price estimates for a set of non-marketed wetland functions in the\ud U.S. mid-Atlantic region Nanticoke River Watershed. The results suggest\ud that for some sites in this watershed, the value of improved wetland condition\ud outweighs the potential value of agricultural production. The average\ud estimated values are also consistent with payments being made by the federal\ud Wetlands Reserve Program (WRP) in the study area