"Inundated by Change: The Effects of Land Use on Flood Damages"
Abstract: Proper land-use policy can help mitigate damages from natural disasters. Management of such policy occurs at different geographic levels, with potential implications for optimal management given the level of aggregation. This study examines this by quantifying the effects of land-use change on flood damages in the state of Texas. I link claims data from the National Flood Insurance Program to a series of land-use changes to construct a tract-by-month panel, and use exogenous variation in precipitation across tract-months to estimate the effect of changes in land use on the frequency and magnitude of new flood insurance claims. I find that increases in impervious surface development within a tract increase flood insurance claims, while increases in water coverage and other natural covers decrease these claims. In addition, using variation in tract-level elevation, I show that land-use change in neighboring geographies—particularly those uphill—affects own-tract flood insurance claims. Overall, these results suggest existence of spatial spillovers from land-use changes within a geography, and imply returns to coordination in land-use policy across geographies.
"Risk Preference Adaptation to Climate Change" (with Remy Levin)
Abstract: How do individual risk preferences adapt to climate change? To study this question, we start by building a model of risk preference adaptation. In our model, a Bayesian agent is exposed to unavoidable, exogenous background risk with an unknown mean and unknown variance, and learns about its moments from personal experience. As the agent's beliefs about the background risk evolve, their preferences over endogenous risks adapt in turn. We test the predictions of our model in two large, longitudinal surveys from Indonesia and Mexico, by linking within-person, long-run changes in elicited risk preferences to data on individual lifetime experiences of climate change. In line with our model's predictions, we find that (1) increases in the experienced mean of heat and precipitation in both settings induce significant decreases in measured risk aversion; (2) increases in the variance of heat in Indonesia and the variance of precipitation in Mexico lead to significant increases in measured risk aversion; (3) the magnitude of the variance effect is 0.7-1.6 times that of the mean effect, indicating that perceptions of uncertainty are of first-order importance; and (4) increases in measured risk aversion correlate with decreases in risk-taking behavior in the domains of migration and smoking. Building on recent advances in welfare economics, in the final part of the paper we develop a new method for estimating whether observed risk preference changes are, in fact, adaptive. Using our method we find that in our sample this is the case, with climate-change-induced risk preference changes increasing collective welfare by approximately one percentage point.
"Adaptation to Weather Shocks and Household Beliefs on Climate: Evidence from California" link to paper
Abstract: Using a difference-in-difference framework, I show that California households exposed to a severe heat wave are differentially more likely to adopt central air conditioning units than those less exposed, controlling for historical climate. Using these "induced adopters" to predict take-up, I show that induced adopters have a significant increase in their summer energy demand 3 years following the heat wave, with insignificant effects on their winter electricity demand. In addition, I present a theoretical framework where household belief-updating about the climate rationalizes household learning about the climate that cannot be explained by myopia or alternative channels.
Works in Progress:
"Directed technical change in energy and choice of market policy"
"International spillover in secondary car market regulation: Evidence from a German scrappage policy"