Job Market Papers*
"Improving Ecosystem Services from U.S. Agriculture: Yield Reserve vs. Land Retirement." Chenyang Hu, Darrell Bosch, Wei Zhang
Abstract Pressure for protecting and restoring water quality requires reductions in nitrogen (N) loads from agriculture. Researchers have been evaluating agricultural production choices along both the extensive and intensive margins to improve ecosystem services. This study examines and compares the cost-effectiveness of a government budget-equivalent Yield Reserve Program and an expansion of land retirement program (CRP) on revenues, costs, output, and potential reductions in N loads from the 10 major crops’ production as a whole and regionally. This study finds that the Yield Reserve Program outperforms the CRP in terms of achieving N reduction under equivalent government budget expenditures. The N reduction under the Yield Reserve Program is partially offset by the "rebound effect" on corn acreage. The CRP shows strong "slippage effect", where the expansion of CRP acreage simply brings marginal land into crop production resulting in small expected N reduction.
*3rd Place Winner in the Job Market Paper Competition at SAEA meeting on Feb 5, 2024
"Assessing The Influence of Solar Development on US Property Values." Chenyang Hu, Zhenshan Chen, Pengfei Liu, Wei Zhang, Darrell Bosch.
Abstract Renewable energy like utility-scale solar is the key to decarbonizing the electricity system. The rapid expansion of solar development often faces local opposition, partly due to a perceived visual disamenity from solar panels. This study provide a US-wide evaluation of the influence of solar development on agricultural operations as well as the externality costs of utility-scale solar projects through the visibility impact on local residential property values. Utilizing the US large-scale solar projects dataset and ZTRAX property dataset, we created a geospatial database on solar farm visibility. Building on hedonic valuation theory and applying a Difference-in-Differences approach, we statistically estimate the impact of solar projects on farmland and local home values, informed by data from the majority of home sales in the United States since 1997. We find that on average, solar projects positively affect the farmland but negatively affects home values in an economically and statistically significant way in close proximity (<6 miles). However, the effect diminishes over time and in distance and is indistinguishable from zero for larger distances and toward the end of our sample. Our findings not only will help establish solar siting procedures that adequately compensate the community and allow socially optimal allocations of resources but also will help to alleviate local opposition to solar proposals and accelerate the energy transition in general.
Working Papers
"Local Externalities of Utility-scale Solar Development in the US." Chenyang Hu, Michael Cary, Zhenshan Chen.
Abstract
"Impacts of Energy Price and Ethanol Demand Shocks on U.S. Agriculture: A Partial Equilibrium Approach." Chenyang Hu, Darrell Bosch, Wei Zhang.
Abstract Pressure for reducing carbon emissions and increasing reliance on renewable fuels may give rise to higher and more variable energy prices. This study examines possible implications of energy price and ethanol demand shocks for U.S. agriculture. Higher energy prices lead to higher crop prices and lower crop output in most farm regions. Livestock production declines while livestock value increases because of higher prices. Higher ethanol demand leads to expansion of corn production. Livestock production increases in response to higher ethanol demand due to the increased availability of by-products used for animal feed. Agricultural stakeholders need to be prepared to anticipate effects of possible energy price increases and ethanol policy changes.
Partial Equilibrium Model
The job market paper and the first working paper use the Regional Environment and Agriculture Programming (REAP) model. The REAP model was developed by USDA’s Economic Research Service to analyze the intersection of agriculture and the environment for policy applications (Johannson, Peters, and House, 2007). Recent issues analyzed using the REAP model include policies to reduce hypoxia in the Gulf of Mexico (Marshall et al. 2018), climate change adaptation (Malcolm et al., 2015), and environmental implications of biofuels (Marshall et al. 2011 and Sands et al. 2017).
REAP is a partial equilibrium model implemented using nonlinear mathematical programming. The model maximizes net welfare (producer plus consumer surplus) from production of crops, livestock, and processed products subject to land supply constraints and production balance requirements (Sands et al. 2017). REAP is a price-endogenous model with prices determined by the intersection of demand and supply curves. As a partial equilibrium model, REAP does not have endogenous markets for factor inputs. REAP simulates a baseline equilibrium as well as alternative scenarios in which prices, policies, or other parameters to the model are changed. Effects of the scenarios can be evaluated for model outcomes including U.S. and regional values for land use, crop and livestock production, prices, farm income, and other indicators including environmental indicators such as erosion and nutrient and pesticide loadings (Sands et al. 2017).
Publication
Duval, D., Bickel, A. K., Frisvold, G., Wu, X., Hu, C. (2018). Contribution of Agriculture to the Maricopa County and Gila River Indian Community Economies. Department of Agricultural and Resource Economics Cooperative Extension The University of Arizona.