• "Improving Ecosystem Services from U.S. Agriculture: Yield Reserve vs. Land Retirement." Chenyang Hu, Wei Zhang, Darrell Bosch

Abstract   Pressure for protecting and restoring water quality requires more reduction 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 production of 10 major crops, both nationally and regionally. Findings indicate that the Yield Reserve Program outperforms the CRP in terms of achieving N reduction under equivalent government budget expenditures. However, the N reduction under the Yield Reserve Program is partially offset by the “rebound effect” on corn acreage whereby corn acreage increases with the subsidized N reduction. The CRP expansion demonstrates a strong “slippage effect”, where the expansion of CRP acreage simply brings marginal land into crop production resulting in a smaller-than-expected N reduction. Sensitivity analysis shows that higher percentage of Yield Reserve in terms of the amount of subsidized N reduction tends to be more cost-effective, and more inelastic land supply tends to reduce the “slippage” of CRP expansion.

*3rd Place Winner in the Job Market Paper Competition at SAEA meeting on Feb 5, 2024

• "Impact of Large-scale Solar on Property Values in the US: Diverse Effects and Causal Mechanisms." Chenyang Hu, Zhenshan Chen, Pengfei Liu, Wei Zhang, Xi He, and Darrell Bosch.

Abstract   As the renewable energy transition continues into less receptive communities, local opposition is expected to intensify, potentially slowing the process. Since the local impacts are neither well quantified nor widely recognized, we lack policies and common practices to mitigate the potential associated welfare loss in affected communities. Based on a nationwide dataset combining property transactions and large-scale solar photovoltaic (LSSPV) sites, we analyze the heterogeneous effects of LSSPV on property prices and the associated causal pathways. Difference-in-differences estimates show that LSSPV significantly increases agricultural or vacant land value by about 19.4% within a 2-mile radius, while simultaneously reducing residential property values within 3 miles. The average negative impact on residential value is significant at -5.2% when proximity is combined with site visibility and -4.6% when the site is invisible; however, the latter becomes insignificant under alternative control group specifications. These negative residential value effects diminish with distance and over time. Heterogeneous effect estimates indicate that high solar lease potential, being in heavily Democratic-leaning counties, and brownfield redevelopment largely mitigate the negative residential value impact. The analysis reveals no significant heterogeneity across a few factors, including different levels of site visibility, directional orientation of properties relative to the LSSPV site, and different tracking systems. Multiple pieces of empirical evidence seem to indicate that the negative impact of LSSPV on residential values stems mainly from negative perceptions rather than physical disamenity levels. Our assessment provides benchmark information for local externality mitigation plans, potentially reducing community opposition and expediting the renewable energy transition.

• "Impacts of Energy Price and Ethanol Demand Shocks on U.S. Agriculture: A Partial Equilibrium Approach." Chenyang Hu, Wei Zhang, and Darrell Bosch.

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.