Water Economics and Policy
Paper Session
Friday, Jan. 3, 2025 10:15 AM - 12:15 PM (PST)
- Chair: Sheila Olmstead, Cornell University
Marine Microplastics and Infant Health
Abstract
A century of plastic usage has led to an accumulation of plastic waste in waterways and oceans.Over time, these wastes break down into particles smaller than 5 microns – or ”microplastics” –
which can infiltrate human biological systems. Despite decades of research into this emerging
source of environmental pollution, there is a paucity of direct evidence on the health impacts of
microplastics exposure at a population scale. This paper reports the first empirical link between
in-utero microplastic exposure and adverse birth outcomes. Our analysis is based on a compiled
dataset of 3 million births that occurred in coastal areas of 15 countries spanning four continents,
which we merge with a novel remote-sensing measurement of marine microplastic
concentrations. We show that in-utero exposure to microplastics, particularly during the third
trimester of pregnancy, leads to a significant increase in the likelihood of low birth weight. A
doubling of exposure increases low birth weight hazard by 0.37 per 1,000 births, which implies
over 205,000 cases per year globally can be attributed to microplastic exposure. We further show
that aerosolization – whereby microplastic particles become airborne and inhalable due to
seawater evaporation – is an important pathway for health impact, a challenge that is likely to
escalate as ocean temperatures continue to rise.
Assessing the Impact of PFAS Water Regulation
Abstract
Certain unregulated and harmful contaminants have become prevalent in the United States’ drinking water systems. These are known as PFAS (Per- and Polyfluoroalkyl Substances), a family of man-made chemicals primarily used in production processes. Appropriately nicknamed “Forever Chemicals”, these substances are difficult and costly to remove. While these chemicals remain federally unregulated under the Safe Drinking Water Act, states like California regulate them. The goal of this paper is to evaluate the impact of the reduction of Notification Levels for Perfluorooctanoic acid (PFOA) and Perfluorooctanesulfonic acid (PFOS) in California in 2019. Anecdotally, this low-cost policy led to improvements in water quality. A key challenge of this analysis is the wide prevalence of partial censoring in PFAS reporting. I first show that applying standard approaches, such as difference-in-differences or changes-in-changes, ignoring this partial censoring, would lead to biased estimates of the causal impact of the regulation. To overcome this bias, I use a parametric approximation to recover the cumulative distribution function (CDF) under partial censoring focusing on the PFAS context in California. I implement a changes-in-changes approach using the recovered distribution of PFAS concentration to estimate the impact of tightening standards for the regulated pollutants on water quality. Using PFAS concentration data at the source-test level from the California Department of Drinking Water and the EPA, paired with socioeconomic and demographic characteristics, weather data, and other variables, I quantify the effect of this policy on water quality. This paper provides evidence on how different regulatory instruments can curb our exposure to pollution. Furthermore, the methods implemented will allow for policy evaluation under partial censoring of data in a variety of contexts.Behavioral Responses to Two-Part Tariffs: Evidence from the Introduction of Volumetric Water Pricing
Abstract
Climate change, population growth, and competing demands for scarce water are straining water resources globally. With growing urbanization, urban utilities face challenges as they struggle to meet growing water demand, update outdated infrastructure, and balance strained water resources on top of pushing the conservation agenda. Economists advocate using price signals to encourage water conservation (Olmstead, REEP 2010); however, there are often political constraints and challenges to using prices for conservation. Furthermore, an ongoing debate persists regarding whether consumers respond to marginal or average prices when facing nonlinear tariffs. Understanding consumers’ responses to prices is important for estimating demand and setting rates to encourage conservation. This paper exploits a wide-scale policy that installs water meters and switches consumers from flat rates to volumetric rates. In 2004, California passed Assembly Bill 2572 to require all urban water suppliers to meter and charge customers for the water they use by 2025. This generates a large and salient increase in the marginal cost of water and provides quasi-experimental data to understand if consumers respond to the price mechanism. This setup allows us to address two primary research questions: 1) how do consumers respond to the introduction of volumetric water rates? and 2) what can we learn about consumer behavior based on heterogeneous responses? The results show heterogeneity among the consumers. The consumers seeing a reduction in total bills after switching to volumetric pricing, and the low-consumption households increase their consumption. On the contrary, the high-water consuming households reduce their consumption. These results are consistent with consumers using heuristics to respond to complicated rate schedules, also termed as “schmeduling” (Liebman and Zeckhauser, 2004), instead of optimizing concerning the correct marginal incentives. This leads to understanding that the changes in marginal incentives may have a limited impact on conservation without large changes in total bills, whichDiscussant(s)
Katrina Jessoe
,
University of California-Davis
David Keiser
,
University of Massachusetts-Amherst
Wes Austin
,
U.S. Environmental Protection Agency
Sheila Olmstead
,
Cornell University
JEL Classifications
- Q2 - Renewable Resources and Conservation
- Q5 - Environmental Economics