APEC Research Reports

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Achieving Cost Effective Conservation: ORES801 Case Studies of Applying Optimization To Protect Endangered Birds, Preserve Agricultural Lands, and Conserve Forested Lands.
(Department of Applied Economics and Statistics, University of Delaware, Newark, DE., 2009-07) Messer, Kent D.
The three following case studies were developed as research projects of the ORES801 course entitled “Optimization: Models and Methods” taught by Dr. Kent Messer in the Fall of 2007 and 2008. The first case study by Allison Borchers evaluates the cost effectiveness of applying optimization techniques to protect the Red Cockaded Woodpecker at the Camp LeJeune Marine Base in North Carolina. The second case study by Anand Kalambur evaluates the use of optimization in the context of agricultural land protection in Cecil County, Maryland. Finally, the third case study by Stela Stefanova applies optimization to identify cost effective project funding for the United States Department of Agriculture’s Forest Legacy program.
Achieving Cost Effective Conservation: ORES801 Case Studies of Optimization Application to the Department of Defense’s Readiness and Environmental Protection Initiative.
(Department of Applied Economics and Statistics, University of Delaware, Newark, DE., 2011-04) Messer, Kent D.
The following case studies were developed as research projects of the ORES801 course entitled “Optimization: Models and Methods” taught by Dr. Kent Messer at the University of Delaware in the Fall of 2010.
Additionality in Water Quality Trading: Evidence from Maryland’s Nutrient Offset Program
(Department of Applied Economics and Statistics, University of Delaware, Newark, DE., 2014-03) Duke, Joshua M.; McGrath, Joshua M.; Fiorellino, Nicole M.; Monteith, Tyler S.; Rosso, Emileigh
This paper examines the potential for nonadditional nonpoint loadings in the Chesapeake Bay as a result of institutions in the new Maryland Nutrient Trading program. The analysis uses real land/agronomic data from a survey of Eastern Shore fields—that are below-baseline—to run BMP scenarios in the trading nterface. Results show 36.8% of acres are estimated to be below-baseline, suggesting the Maryland performance-based baseline may be “looser” than many might think. Regression models isolate the marginal impact on average of seven BMPs, individually adopted, using a sample of 77 below-baseline fields. The results suggested that six BMPs generate nitrogen offsets, while four BMPs generate substantively significant phosphorus offsets. Coupled with potentially permissive rules about additionality for annual practices and monitoring costs, the analysis suggests that annual practices pose viable avenues for nonadditional loadings. The analysis concludes with an estimation of the possible impact on the Bay if 50% of below baseline fields have a BMP currently in place. The analysis shows that for some structural BMPs, the impact of one BMP can be at a level that is 3.0 - 8.3% of the current N and P load for agricultural in the Eastern Shore.
Addressing Social Dilemmas with Mascots, Information and Graphics
(Department of Applied Economics and Statistics, University of Delaware, Newark, DE., 2018-01) Butler, Juliana M.; Fooks, Jacob R.; Messer, Kent D.; Palm-Forster, Leah H.
Ag-E MINDSPACE Effect Size Table
(Department of Applied Economics and Statistics, University of Delaware, Newark, DE., 2019-03) Palm-Forster, Leah, H.; Ferraro, Paul J.; Janusch, Nicholas; Vossler, Christian A.; Messer, Kent D.
In our recent paper in Environmental & Resource Economics, we recommend that authors report standardized effect sizes when reporting the results of experimental economics studies (Palm-Forster et al., forthcoming). Standardized effect sizes allow readers to compare the magnitudes of estimated treatment effects across different treatments and outcomes. Researchers can also use published effect sizes as priors when conducting ex-ante power analyses. We present a table of standardized effect sizes reported in experimental economics papers that analyze agri-environmental (Ag-E) issues (the table can be found at https://osf.io/cf259/). We use Dolan et al.’s (2012) MINDSPACE framework to classify behavioral nudges into nine categories, all of which can influence the behavior of agricultural producers: messengers, incentives, norms, defaults, salience, priming, affect, commitment, and ego. We refer readers to our paper for more information about this body of literature (https://doi.org/10.1007/s10640-019-00342-x). Our paper also describes key methodological challenges and recommendations for experimental agri-environmental research.
Are Consumers Really Willing to Pay More for Local Foods? A Field Experiment
(Department of Applied Economics and Statistics, University of Delaware, Newark, DE., 2022-11-08) Kelly A. Davidson; Badri Khanal; Kent D. Messer
Have local food promotion programs convinced consumers to pay more for local food? Studies to date, which have mostly relied on hypothetical stated preference surveys, have shown that local premiums exist but premiums vary by product and geographic identity. This study reports results from a field experiment involving 1,050 adult consumers to reveal consumers’ willingness to pay premiums for “locally produced” oysters and mushrooms. Despite strong statistical power, this study reveals no positive effect of the local label on consumer willingness to pay. These null results have important implications for state and federal agencies that promote often-generic local labeling campaigns.
Are you more economic than a first grader?: A mixed methods approach in a common pool resources experiment
(Department of Applied Economics and Statistics, University of Delaware, Newark, DE., 2016-01) Jennings, Amanda Brooke;
The purpose of this mixed methods study is to investigate the similarities and differences between children, lay adults, and economics experts in a common pool resources game, thereby providing initial insight into children’s naïve economic theories. Quantitative data is drawn from participation in an artifactual field experiment adapted from Knapp & Murphy’s (2010) common pool resource game. Qualitative data is drawn from semi-structured interviews. By incorporating mixed methods within the framework of a common pool resources game, I capture both behaviors during the game and insight into reasons for those behaviors. I use a binary logistic model to predict participants’ choices to play the game vs. take an allocation of a resource. The sample, N=47, consists of three purposefully selected groups: children, novice adults (no advanced economics knowledge), and expert adults (graduate level economics knowledge). Consistent with the literature, males are more likely to play the game and females are more likely to take the allocation. While the literature is mixed with respect to how children behave when compared to novice adults, this study finds children are significantly more likely to play the game than novice adults and equally likely to play the game as expert adults. Qualitative data provides possible explanations for these findings. Findings have implications for economic education curriculum design and instruction.
Auction versus Posted Price in Experiments: Comparisons of Mean and Marginal Effect
(Department of Applied Economics and Statistics, University of Delaware, Newark, DE., 2017-06) Wu, Shang; Fooks, Jacob; Li, Tongzhe; Messer, Kent D.; Delaney, Deborah
Economic experiments have been widely used to elicit individuals’ evaluation for various commodities and non-market goods. Common elicitation methods include auctions and posted price mechanisms. Experimental auctions are theoretically incentive compatible so are assumed to give an unbiased estimate of individuals’ evaluation including willingness to pay (WTP). However, the vast majority of purchasing decisions are not made in auctions but in market settings, such as grocery stores, where consumers make yes/no decisions in response to a set price. In this research, we carefully design an experiment to compare homegrown-value WTP estimates between an auction and a posted price elicitation format. This design enables us to make both within- and between-subjects comparisons of the mean WTP and marginal effect estimates. Results from 115 adult consumers indicate that WTP estimates obtained from an auction are approximately 32% - 39% smaller than WTP estimates obtained from a posted price mechanism. In addition, we compare the statistical significance and conclude that auctions require a smaller sample size than posted price mechanisms in order to detect the same preference change. Nevertheless, the signs of marginal effects for different product characteristics are consistent in both mechanisms.
Back to the Source: Consumer Behavior in Response to Different Sources of Recycled Irrigation Water
(Department of Applied Economics and Statistics, University of Delaware, Newark, DE., 2022-06-12) Messer, Kent D.; Ellis, Sean F.; Kecinski, Maik; Ganguly, Diya
Using recycled water to irrigate agricultural products can be an effective solution to water scarcity. However, a better understanding of how society evaluates different sources of recycled water provides insights into potential demand-side barriers to adoption of these solutions. This paper implements a field economic experiment conducted in the Southwest and Mid-Atlantic regions of the United States that evaluates consumers’ willingness-to-pay for three sources of recycled irrigation water: “gray”, “black”, and “produced”. Our analysis indicates that people consider certain sources of recycled water more acceptable for irrigating produce than others. Recycled gray water is preferred to recycled-produced water, and both are preferred to recycled black water. We also explore how adult consumers respond to scientific information about the benefits and risks of using recycled irrigation water, and find that it does not mitigate consumers’ concerns.
Behavioral and experimental agri-environmental research: methodological challenges, literature gaps, and recommendations
(Department of Applied Economics and Statistics, University of Delaware, Newark, DE., 2019-12) Palm-Forster, Leah; Ferraro, Paul J.; Janusch, Nicholas; Vossler, Christian A.; Messer, Kent D.
Insights from behavioral and experimental economics research can inform the design of evidence-based, cost-effective agri-environmental programs that mitigate environmental damages and promote the supply of environmental benefits from agricultural landscapes. To enhance future research on agri-environmental program design and to increase the speed at which credible scientific knowledge is accumulated, we highlight methodological challenges, identify important gaps in the existing literature, and make key recommendations for both researchers and those evaluating research. We first report on four key methodological challenges – underpowered designs, multiple hypothesis testing, interpretation issues, and choosing appropriate econometric methods – and suggest strategies to overcome these challenges. Specifically, we emphasize the need for more detailed planning during the experimental design stage, including power analyses and publishing a pre-analysis plan. Greater use of replication studies and meta-analyses will also help address these challenges and strengthen the quality of the evidence base. In the second part of this paper, we discuss how insights from behavioral and experimental economics can be applied to improve the design of agri-environmental programs. We summarize key insights using the MINDSPACE framework, which categorizes nine behavioral effects that influence decision-making (messenger, incentives, norms, defaults, salience, priming, affect, commitment, and ego), and we highlight recent research that tests these effects in agri-environmental contexts. We also propose a framework for prioritizing policy-relevant research in this domain.
Behavioral Responses to Science-based Eco-labeling: Gold, Silver, or Bronze
(Department of Applied Economics and Statistics, University of Delaware, Newark, DE., 2018-02) Li, Tongzhe; Kecinski, Maik; Messer, Kent D.
This study uses unique data collected from field experiments to investigate consumer willingness to pay (WTP) for otherwise homogeneous commodities that provide different levels of environmental services. On average, individuals are willing to pay more for products that provide a higher level of ecosystem services. This effect is larger when the label contains symbols that explicitly differentiate the levels and the magnitude is further amplified when it contains brief information on the scientific basis for the levels. However, our results also suggest that the WTP premium for the superior product is smaller than the discount in WTP for the inferior product. JEL Classifications: D12, Q55, M31, L10
Children’s vulnerability to natural disasters: Evidence from natural experiments in Bangladesh
(Department of Applied Economics and Statistics, University of Delaware, Newark, DE., 2019-12) Ahsanuzzaman; Islan, Muhammad Q.
Both developed and developing countries face natural disasters, but it is the poor areas in developing countries, particularly women and children, that are most affected by those disasters in terms of loss of lives and livelihoods. If the predictions climate change models bear out, Bangladesh could be affected by frequent and severe natural disasters such as the rise in sea level leading to floods, cyclones, etc. Natural disasters adversely affect employment opportunities and earnings of the most vulnerable households. Loss of employment and earnings can affect the nutritional intake of children in natural disaster affected regions. Since nutritional status in the early age of 0-60 months of a child determines the cognitive ability and other developments, hindrances that affect nutritional supply and result in low nutritional intake can have adverse lifetime effects on children affected by such events. Consequently, the frequency and severity of natural disasters due to climate change have intergenerational effects. In this study, we examine the effects of natural disasters – specifically, cyclones Sidr and Aila - on children’s nutritional status in Bangladesh. We estimate the nutritional status of children below 60-months age who had been exposed to those extreme events in November 2007 and May 2009. Results show that children who had been exposed to such an extreme climate events from sometime in utero to newborn stages suffer significant reduction in height for age Z score and are more likely to be stunted and underweight. This is particularly important as among other nutritional outcome indicators, height for age Z score is regarded as a measure of the long-term consequence of nutritional intake. Our findings suggest that even a single extreme event such as super cyclone Sidr can exert long term detrimental effects to hinder development of children of a generation exposed to such disasters.
Comparison of Statistical Learning and Predictive Models on Breast Cancer Data and King County Housing Data
(Department of Applied Economics and Statistics, University of Delaware, Newark, DE., 2017-09) Cai, Yunjiao; Fu, Zhuolun; Zhao, Yuzhe; Hu, Yilin; Ding, Shanshan
In this study, we evaluate the predictive performance of popular statistical learning methods, such as discriminant analysis, random forests, support vector machines, and neural networks via real data analysis. Two datasets, Breast Cancer Diagnosis in Wisconsin and House Sales in King County, are analyzed respectively to obtain the best models for prediction. Linear and Quadratic Discriminant Analysis are used in WDBC data set. Linear Regression and Elastic Net are used in KC house data set. Random Forest, Gradient Boosting Method, Support Vector Machines, and Neural Network are used in both datasets. Individual models and stacking of models are trained based on accuracy or R-squared from repeated cross-validation of training sets. The final models are evaluated by using test sets.
Competition in Stackelberg Oligopolies: First Mover Advantage vs. Inequality Aversion
(Department of Applied Economics and Statistics, 2015-05) Kecinski, Maik
This paper reports on experimental results from a 2-period sequential Stackelberg game where players have a one time opportunity to invest positive relative pro ts in order to lower marginal cost and gain competitive advantage. Theory predicts one sub-game perfect Nash equilibrium in pure strategies with both Stackelberg leaders and Stackelberg followers playing absolute pro t maximizing strategies and leaders earning much larger pay than followers. Experimental results, however, show that Cournot play is modal. Stackelberg leaders learn to play fair through punishment. Investment to lower marginal cost was more frequent among Stackelberg followers, who used relative pro t maximizing strategies to punish rather than to gain competitive advantage.
Conservation Professional Attitudes about Cost Effectiveness of the Land Preservation: A Case Study in Maryland
(Department of Applied Economics and Statistics, University of Delaware, Newark, DE., 2014-03) Messer, Kent D.; Allen, William; Kecinski, Maik; Chen, Yu
A consensus exists amongst academics that cost-effective land preservation should involve benefits and costs. In reality, the vast majority of conservation programs are not cost-effective, i.e. lower conservation benefits are achieved for the limited funding. Little research has been conducted about the attitudes of conservation professionals about the importance of being cost-effective and little is known about how conservation professionals believe that they can become more cost-effective. This study reports on a survey conducted with conservation professionals associated with the State of Maryland’s agricultural protection program, a leading program in the United States. Results suggest that while conservation professionals are generally in favor cost-effective conservation, it is not a top goal for them. Processes such as transparency and fairness are rated more important. This research shows how the willingness of administrators to adopt mathematical programming techniques is significantly influenced by knowledge of optimization technique, administrative requirements, cost concerns, percentage of agricultural land previously preserved in the county, how rural the county is, and lack of incentive for administrators to adopt cost-effectiveness techniques. This finding is important to understand the lack of adoption of cost-effective techniques. Results also suggest that adoption may be enhanced with the availability of software and training.
Conserving Spatially Explicit Benefits in Ecosystem Service Markets: Lab and Artefactual Field Tests of Network Bonuses and Spatial Targeting
(Department of Applied Economics and Statistics, University of Delaware, Newark, DE., 2014-01) Fooks, Jacob; Higgins, Nate; Messer, Kent D.; Duke, Joshua M.; Hellerstein, Dan; Lynch, Lori
Conserving contiguous areas often enhances environmental benefits. However, most conservation efforts are voluntary, incentive-based, do not reward landowners for contiguity, or select based on contiguity. Thus, achieving optimal contiguity of conserved parcels is unlikely especially with limited budgets. Using laboratory and artefactual field experiments, this paper evaluates two mechanisms in the context of reverse auctions for achieving optimal contiguity: network bonuses and spatial targeting. Results suggest that spatial targeting alone improves the aggregate environmental and social welfare outcomes while network bonuses alone result in worse outcomes. The interaction of the bonus-effect and the targeting-effect is positive, suggesting that in a competitive auction environment that already includes bonuses, adding spatial targeting minimizes the damage.
Consumer Demand for Local Honey: An Artefactual Field Experiment
(Department of Applied Economics and Statistics, University of Delaware, Newark, DE., 2014-05) Wu, Shang; Fooks, Jacob; Messer, Kent D.; Delaney, Deborah
How to best target and attract niche market consumers is an important marketing problem for producers of specialty agricultural products. It is particularly an issue in the honey market where consumers increasingly face media messages regarding threats to honey bee health, honey adulteration, and health benefits of locally produced honey. Using auction experiments, this research evaluates consumer behavior related to informational messages about honey that is produced locally, domestically, and internationally. Results from 115 adult consumers show that consumers’ demand for honey varies significantly based on the geographic location of the honey’s production, product packaging, and the information they have about the product. Consumers demonstrate greater demand for locally produced honey, especially when provided information about negative aspects of internationally produced honey that include adulteration. This shows that such negative media attention on specialty products offers small producers an opportunity to increase profitability by marketing themselves as a specialized niche alternative.
Consumer Perceptions After Long Term Use or Alternative Irrigation Water: An Israeli Field Experiment
(Department of Applied Economics and Statistics, University of Delaware, Newark, DE., 2020-03) Ellis, S.F.; Kecinski, Maik; Messer, Kent D.; Lipchin, Clive
This study provides the first revealed preference estimates of Israeli’s willingness-to-pay for produce irrigated with alternative water. It also investigates how exposure to information about the benefits and risks of recycled water affects these preferences. Results show that Israeli’s prefer produce irrigated with conventional water over any type of alternative water, and that preferences for alternative water varies by type. Exposure to information about the risks of recycled water increases consumers’ willingness-to-pay for produce irrigated with desalinated water. These results indicate there may be limits to how high consumer demand for alternative water can rise even after long term implementation.
Consumer Preferences for the Provision of Water Quality Services by Oysters
(Department of Applied Economics and Statistics, University of Delaware, Newark, DE., 2016-03) Kecinski, Maik; Messer, Kent D.; Peo, Audrey J.
In the United States and many other countries around the world, estuary eutrophication is a major environmental problem that can result in harmful algal blooms with detrimental impacts on eco-systems and humans, while imposing substantial costs. Oysters are suspension feeders, filtering phytoplankton from water anad thereby reducing organic matter, the primary driver of eutrophication. The U.D. National Oceanic and Atmospheric Administration (NOAA) supports using shellfish aquaculture as a nutrient management practice. Our revealed preference dichotomous choice experiments test if participants are willing to pay price premiums for oysters that provide eco-system services. Results suggest that if oysters are from waters containing an unknown amount of nutrients, providing participants with information does not have an effect. However, providing partcipants with information about eutrophication and oysters’ ability to filter nutrients from water makes them more likely to choose oysters from low nutrient waters. Oysters from moderate and high nutrient waters, which provide larger eco-system services, are significantly more likely to be selected if participants receive no information.
Consumer Preferences for the Provision of Water Quality Services by Oysters
(Department of Applied Economics and Statistics, University of Delaware, Newark, DE., 2017-06) Kecinski, Maik; Messer, Kent D.; Peo, Audrey J.
In the United States and many other countries around the world, estuary eutrophication is a major environmental problem than can results in harmful algal blooms with detrimental impacts on eco-systems and humans, while imposing substantial costs. Oysters are suspension feeders, filtering phytoplankton from water and thereby reducing organic matter, the primary driver of eutrophication. The U.S. National Oceanic and Atmospheric Administration (NOAA) supports using shellfish aquaculture as a nutrient management practice. Our revealed preference dichotomous choice experiments test if participants are willing to price premiums for oysters that provide eco-system services. Results suggest that if oysters are from waters containing an unknown amount of nutrient, providing participants with information does not have an effect. However, providing participants with information about eutrophication and oysters ability to filter nutrients from water makes them more likely to choose oysters from low nutrient waters. Oysters from moderate and high nutrient waters, which provide larger eco-system services, are significantly more likely to be selected if participants receive no information.

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