Essays on the Economics of Land Use and Water Quality

This dissertation is a collection of three essays that address the economic and environmental effects of land use spillovers. The first essay explores mechanisms for controlling nonpoint source water pollution, given that water quality in a watershed is a function of spillovers from agricultural production. The second essay considers the selection of an optimal wildlife corridor, on the basis that parcel values are a function of nearby land use. The third essay estimates the effect of spillovers from open space land on residential property prices. Taken together, the essays address enduring environmental economics issues through the application of contemporary economic tools. The first essay proposes a mechanism for addressing ambient pollution through a background threat of regulation which induces nonpoint source polluters to voluntarily reduce emissions. Specifically, the severity of the threatened tax policy is endogenous to voluntary stage outcomes. Beyond showing the mechanism?s theoretical properties, the essay highlights a set of economics experiments in which participants are faced with a voluntary-threat policy. The second essay introduces a model for determining an optimal wildlife corridor that, in a departure from previous corridor research, accounts for both the costs and benefits of individual parcels. By combining parcel-level costs and benefits for land areas connecting three ecosystems in the Northern Rockies, the economic tradeoffs inherent in corridor design are empirically examined. By varying the granularity of the available parcels, the study explores issues related to model specificity and computational complexity. A heuristic is also proposed that offers considerable computational advantages and approximates the optimal corridor. The third essay applies hedonic pricing methods to estimate marginal implicit prices for open space land and other landscape amenities across distinct urban, suburban and rural submarkets in Rochester, NY, rather than the standard approach which assumes spatial uniformity. Results, controlling for spatial autocorrelation and the endogeneity of nearby open space, suggest that public open space is most highly valued in urbanized areas and that private open space is relatively valuable in rural areas. Additionally, proximity to concentrated animal feeding operations and other locational disamenitites have a significantly negative impact on home prices