Publications

Date published: Jun 14 2016
Publication type: Journal article

This paper provides a review and synthesis of geo-economic models that are used to analyze coastal erosion management and shoreline change. We outline a generic framework for analyzing risk-mitigating and/or recreation-enhancing policy interventions within a dynamic framework, and we review literature that informs the nature and extent of net benefit flows associated with coastal management. Using stated preference analysis, we present new estimates on household preferences for shoreline erosion management, including costs associated with ecological impacts of management.  Lastly, we offer some guidance on directions for future research.

Gopalakrishnan, S., Landry, C.E., Smith, M.D., Whitehead, J.C., ‘Economics of Coastal Erosion and Adaptation to Sea Level Rise’, 2016, forthcoming, Annual Review of Resource Economics

Date published: Jun 14 2016
Publication type: Journal article

Growing concerns over climate change and the potential for large damages due to non-linear processes underscore the need for meaningful sustainability assessment of an economy. Economists have developed rigorous approaches to conceptualizing sustainability based on the paradigm of weak sustainability, which relies on extensive substitution among reproducible capital, renewable resources and exhaustible natural resources. In contrast, strong sustainability emphasizes physical limits to this substitution and the importance of maintaining the resilience of normally functioning biophysical processes. Recent progress in resource and environmental economics has demonstrated the feasibility of incorporating strong sustainability features, including tipping points, uncertainties and resilience, to assess efficiency and optimal policies. Given that weak sustainability and intertemporal efficiency share a welfare theoretic foundation, we ask: to what extent can these approaches be applied to evaluate sustainability? We highlight recent work on assessing sustainability in imperfect economies and dynamic models of intertemporal welfare that embed strong sustainability features. 

Irwin, E., Gopalakrishnan, S., and Randall, A., ‘Welfare, Wealth and Sustainability’, 2016 forthcoming, Annual Review of Resource Economics. Available at SSRN:http://ssrn.com/abstract=2726849

Date published: Jun 14 2016
Publication type: Journal article

Unconventional shale gas activity has presented both challenges and opportunities for conservation. The unique nature of horizontal drilling used in shale exploration allows for a reduction in the footprint of shale-related activity in the landscape. However, existing policies regulating shale activity across the Northeast, particularly in Pennsylvania, largely miss an opportunity to encourage such consolidation, which would result in substantial ecosystem conservation. Using satellite land cover data for the years 2006 and 2011 combined with data on shale drilling activity in Pennsylvania, we show that a consolidation of wells to underutilized well pads would have resulted in a forest conservation gain of over 112,838 acres between 2006 and 2015. While likely an overestimate, this suggests that small changes in policy such as moving toward a quantity-based market mechanism to regulate the number of well pads would result in substantial conservation gains.

Klaiber, H.A.,  Gopalakrishnan, S., and Hasan, Syed, ‘Missing the forest for the trees: balancing shale exploration and conservation goals through policy’, 2016, forthcoming, CONSERVATION LETTERS, DOI: 10.1111/conl.12238. http://onlinelibrary.wiley.com/doi/10.1111/conl.12238/full

Date published: Jun 14 2016
Publication type: Working paper

Coastal climate adaptation unites approaches within environmental and resource economics and other disciplines. Sea-level rise, ocean warming and acidification, and increased storminess are press and pulse disturbances that threaten to alter or intensify bio-physical coastal changes. Communities respond in ways that neither maximize total economic value nor apply the appropriate spatial scale of response. We synthesize multiple strains of modeling and empirical work that inform coastal adaptation, focusing on coastline change. North Carolina illustrates broad themes of coastal adaptation, exemplifies coastal resource valuation, and highlights research and policy challenges. Modeling coastlines as coupled human-natural systems explains historic patterns of coastline change, clarifies needs for empirical estimates, and provides a roadmap for interdisciplinary policy analysis of adaptation. Despite extensive literature on coastal amenities, hazards, and ex post policy evaluation, parameterizing coupled models of complex coastal environments facing climate change requires much more empirical information. Extending coupled models of coastal adaptation to incorporate spatial-dynamics and both market and non-market values also points to fundamental problems with status quo governance structures. To maximize total economic value in the coastal zone, adaptation will require multi-scale governance and attention to many margins and tradeoffs across market and non-market values, echoing recent advances in fisheries  bioeconomics. 

Gopalakrishnan S., Landry, C.L., and Smith, M.D., ‘Coastal Climate Adaptation: A Grand Challenge for Environmental and Resource Economics’, 2016, Working Paper

Date published: May 1 2016
Publication type: Journal article

Climate change threatens to alter coastline erosion patterns in space and time and coastal communities adapt to these threats with decentralized shoreline stabilization measures. We model strategic interaction between two neighboring towns, and explore welfare implications of spatial-dynamic feedbacks in the coastal zone. When communities are adjacent, the seaward community loses sand to the landward community through alongshore sediment transport.  Strategic interactions create incentives for both communities nourish less, resulting in lower long-run beach width and lower property values in both communities, a result that parallels the classic prisoner’s dilemma. Intensifying erosion—consistent with accelerating sea level rise — increases the losses from failure to coordinate. Higher erosion also increases inequality in the distribution of benefits across communities under spatially coordinated management. This disincentive to coordinate suggests the need for higher-level government intervention to address a traditionally local problem. We show that a spatially targeted subsidy can achieve the first best outcome and explore conditions under which a second-best uniform subsidy leads to small or large losses.

Gopalakrishnan. S, McNamara. D, Smith. M and Murray. A.B, ‘Decentralized Management Hinders Coastal Climate Adaptation: The Spatial-dynamics of Beach Nourishment’,  2016, forthcoming, Environmental and Resource Economics. Available at SSRN: http://ssrn.com/abstract=2457631

Date published: Mar 26 2015
Publication type: Journal article

McNamara DE, Gopalakrishnan S, Smith MD, Murray AB, 2015, PLoS ONE 10(3): 

Human population density in the coastal zone and potential impacts of climate change underscore a growing conflict between coastal development and an encroaching shoreline. Rising sea-levels and increased storminess threaten to accelerate coastal erosion, while growing demand for coastal real estate encourages more spending to hold back the sea in spite of the shrinking federal budget for beach nourishment. As climatic drivers and federal policies for beach nourishment change, the evolution of coastline mitigation and property values is uncertain. We develop an empirically grounded, stochastic dynamic model coupling coastal property markets and shoreline evolution, including beach nourishment, and show that a large share of coastal property value reflects capitalized erosion control. The model is parameterized for coastal properties and physical forcing in North Carolina, U.S.A. and we conduct sensitivity analyses using property values spanning a wide range of sandy coastlines along the U.S. East Coast. The model shows that a sudden removal of federal nourishment subsidies, as has been proposed, could trigger a dramatic downward adjustment in coastal real estate, analogous to the bursting of a bubble. We find that the policy-induced inflation of property value grows with increased erosion from sea level rise or increased storminess, but the effect of background erosion is larger due to human behavioral feedbacks. Our results suggest that if nourishment is not a long-run strategy to manage eroding coastlines, a gradual removal is more likely to smooth the transition to more climate-resilient coastal communities.

http://journals.plos.org/plosone/article?id=10.1371/journal.pone.0121278

Date published: Nov 26 2014
Publication type: Policy brief

Produced by The Ohio State University's Subsurface Energy Resource Center

Date published: Jun 25 2014
Publication type: Book/book chapter

Bioeconomics is the application of capital theory to ecological and biological resources.  The study of bioeconomics links natural and economic science.  This linkage is fundamental to maximize the net present value of earth’s resources or manage these resources sustainably.  This chapter illustrates how capital theory, in the context of bioeconomics, can be applied to ecological and biological resources to recover their values as capital assets and simultaneously provide an optimal investment path.  The chapter also discusses the need for increasing ecological and economic realism in bioeconomic models and highlights directions for increasing realism that are likely to yield the greatest advances.    

Fenichel, Eli, Gopalakrishnan, S., and Bayasgalan, Onon, ‘Bioeconomics: Nature as Capital’, in the Handbook on the Economics of Natural Resources, Eds., David Layton and Robert Halvorsen, (Forthcoming)

Date published: Jun 25 2014
Publication type: Book/book chapter

On developed coastlines, humans react to physical processes in coastal environments by stabilizing shorelines against chronic erosion and by taking measures to prevent destruction of coastal infrastructure during storms. While we are beginning to understand how physical processes affect human behavior, causality runs in the other direction as well. Over decades or longer, even localized anthropogenic shoreline manipulations influence large-scale patterns of coastline change as much as physical, climate-related forcing does. The long-range spatial and temporal spillovers of localized human actions in coastal environments, combined with widespread localized shoreline-stabilization and storm-protection efforts, amount to an unintentional geo-engineering of our coastlines. In essence, investments in coastal engineering fail to consider tradeoffs that can unfold over long temporal or large spatial scales. A more purposeful geo-engineering of coastlines requires a richer understanding of the two-way couplings between physical and human coastline dynamics, including efforts to reduce uncertainties in forecasting future scenarios for the coupled system. Steering toward preferred outcomes for our coastlines and coastal economies will involve coordination across local, state, and federal jurisdictions to mitigate spatial externalities that extend beyond local communities. 

Smith, M. D, Murray, A. B., Gopalakrishnan, S., Keeler, A., Landry, C., McNamara, D. E. and Moore, L., ‘Geoengineerng Coastlines? From accidental to incidental". In "Coastal Zone Challenges: 21 Solutions for Our Century.’ (Forthcoming)

Date published: Jun 23 2014
Publication type: Working paper

On developed coastlines, humans react to physical processes in coastal environments by stabilizing shorelines against chronic erosion and by taking measures to prevent destruction of coastal infrastructure during storms. While we are beginning to understand how physical processes affect human behavior, causality runs in the other direction as well. Over decades or longer, even localized anthropogenic shoreline manipulations influence large-scale patterns of coastline change as much as physical, climate-related forcing does. The long-range spatial and temporal spillovers of localized human actions in coastal environments, combined with widespread localized shoreline-stabilization and storm-protection efforts, amount to an unintentional geo-engineering of our coastlines. In essence, investments in coastal engineering fail to consider tradeoffs that can unfold over long temporal or large spatial scales. A more purposeful geo-engineering of coastlines requires a richer understanding of the two-way couplings between physical and human coastline dynamics, including efforts to reduce uncertainties in forecasting future scenarios for the coupled system. Steering toward preferred outcomes for our coastlines and coastal economies will involve coordination across local, state, and federal jurisdictions to mitigate spatial externalities that extend beyond local communities.

Smith, M. D., Murray, A. B., Gopalakrishnan, S., Keeler, A. G., Landry, C. E., McNamara, D., & Moore, L. J. (2014). Geoengineering Coastlines? From Accidental to Intentional. From Accidental to Intentional (March 3, 2014). Working Paper Series. Available at SSRN: http://ssrn.com/abstract=2403945

Date published: Jan 1 2014
Publication type: Journal article

Profitable extraction of previously inaccessible shale gas reserves has led to rapid expansion of shale exploration across the United States. While there is much enthusiasm surrounding the benefits from this source of energy as a potential path to energy independence, very little is known about the environmental risks associated with this exploration activity. In this paper, we present one of the first empirical studies to measure the impact of early shale exploration as capitalized into surrounding property values. Our dataset combines real estate data, shale well data and land use data in Washington County, Pennsylvania from 2008 to mid-2010 to estimate the impact of shale activity on nearby housing values using a Box-Cox hedonic specification. We find that households are adversely impacted by shale gas exploration activity, but this impact depends on the proximity and intensity of shale activity and is largely transitory in duration. While the magnitude of the overall effect of an additional shale well within one mile from the property is modest (-0.8%) this impact is heterogeneous. The effect is larger for households located close to major highways and sourced with private well water. The impacts are larger and more persistent for properties surrounded by agricultural lands.

Gopalakrishnan, S., & Klaiber, H. A. (2014). Is the shale energy boom a bust for nearby residents? Evidence from housing values in Pennsylvania. American Journal of Agricultural Economics96(1), 43-66. http://ajae.oxfordjournals.org/content/96/1/43.short

Date published: Dec 2 2013
Publication type: Journal article

Gopalakrishnan, S and Klaiber, HA, "Is the Shale Boom a Bust for Nearby Residents? Evidence from Housing Values in Pennsylvania.” AMERICAN JOURNAL OF AGRICULTURAL ECONOMICS. Forthcoming. (authorship equally shared)

Date published: Jun 1 2013
Publication type: Journal article

Shoreline erosion is a natural trend along most sandy coastlines. Humans often respond to shoreline erosion with beach nourishment to maintain coastal property values. Locally extending the shoreline through nourishment alters alongshore sediment transport and changes shoreline dynamics in adjacent coastal regions. If left unmanaged, sandy coastlines can have spatially complex or simple patterns of erosion due to the relationship of large-scale morphology and the local wave climate. Using a numerical model that simulates spatially decentralized and locally optimal nourishment decisions characteristic of much of U.S East coast beach management we find that human erosion intervention does not simply reflect the alongshore erosion pattern. Spatial interactions generate feedbacks in economic and physical variables that lead to widespread emergence of "free riders" and "suckers" with subsequent inequality in the alongshore distribution of property value. Along cuspate coastlines, such as those found along the U.S. Southeast Coast, these long-term property value differences span an order of magnitude. Results imply that spatially decentralized management of nourishment can lead to property values that are divorced from spatial erosion signals; this management approach is unlikely to be optimal.  

Williams, Z. C., McNamara, D. E., Smith, M. D., Murray, A. B., & Gopalakrishnan, S. (2013). Coupled economic‐coastline modeling with suckers and free riders. Journal of Geophysical Research: Earth Surface118(2), 887-899. http://onlinelibrary.wiley.com/doi/10.1002/jgrf.20066/full

Date published: Apr 2 2013
Publication type: Journal article

Humans are increasingly altering the Earth's surface, and affecting processes that shape and reshape landscapes. In many cases, humans are reacting to landscape-change processes that represent natural hazards. Thus, the landscape is reacting to humans who are reacting to the landscape. When the timescales for landscape change are comparable to those of human dynamics, human and ‘natural’ components of developed environments are dynamically coupled—necessitating coupling models of human and physical/biological processes to study either environmental change or human responses. Here we focus on a case study coupling models of coastal economics and physical coastline change. In this modeling, coastline change results from patterns of wave-driven sediment transport and sea-level rise, and shoreline stabilization decisions are based on the benefits of wide beaches (capitalized into property values) balanced against the costs of stabilization. This interdisciplinary modeling highlights points that may apply to other coupled human/natural systems. First, climate change, by accelerating the rates of landscape change, tends to strengthen the coupling with human dynamics. In our case study, both increasing sea-level-rise rates and changing storm patterns tend to increase shoreline change rates, which can induce more vigorous shoreline stabilization efforts. However, property values can fall dramatically as erosion rates and stabilization costs rise, which can also lead to the abandonment of expensive stabilization methods as shoreline change rates increase. Second, socio-economic change can also strengthen the human/landscape coupling. Changing costs of shoreline stabilization can alter stabilization decisions, which in turn alters patterns of coastline change. The coupled modeling illuminates the long-range effects of localized shoreline stabilization efforts; communities arrayed along a coastline are unwittingly affecting each other's erosion rates, and therefore each other's economies. Our coupled modeling experiments show that spatial distributions of property values and erosion rates can jointly affect economic outcomes, resource allocation between communities, and patterns of shoreline change. These findings raise questions about coastal management strategies, and efficient and equitable allocation of scarce resources among coastal communities.

Brad Murray, A., Gopalakrishnan, S., McNamara, D. E., & Smith, M. D. (2013). Progress in coupling models of human and coastal landscape change.Computers & Geosciences53, 30-38. http://www.sciencedirect.com/science/article/pii/S0098300411003414

Date published: Dec 14 2011
Publication type: Journal article

Developed coastal areas often exhibit a strong systemic coupling between shoreline dynamics and economic dynamics. “Beach nourishment”, a common erosion-control practice, involves mechanically depositing sediment from outside the local littoral system onto an actively eroding shoreline to alter shoreline morphology. Natural sedimenttransport processes quickly rework the newly engineered beach, causing further changes to the shoreline that in turn affect subsequent beach-nourishment decisions. To the limited extent that this landscape/economic coupling has been considered, evidence suggests that towns tend to employ spatially myopic economic strategies under which individual towns make isolated decisions that do not account for their neighbors. What happens when an optimization strategy that explicitly ignores spatial interactions is incorporated into a physical model that is spatially dynamic? The longterm attractor that develops for the coupled system (the state and behavior to which the system evolves over time) is unclear. We link an economic model, in which town-manager agents choose economically optimal beach-nourishment intervals according to past observations of their immediate shoreline, to a simplified coastal-dynamics model that includes alongshore sediment transport and background erosion (e.g. from sea-level rise). Simulations suggest that feedbacks between these human and natural coastal processes can  generate emergent behaviors. When alongshore sediment transport and spatially myopic nourishment decisions are coupled, increases in the rate of sea-level rise can destabilize economically optimal nourishment practices into a regime characterized by the emergence of chaotic shoreline evolution.

Lazarus, E. D., McNamara, D. E., Smith, M. D., Gopalakrishnan, S., & Murray, A. B. (2011). Emergent behavior in a coupled economic and coastline model for beach nourishment. Nonlinear Processes in Geophysics18(6), 989-999. http://www.nonlin-processes-geophys.net/18/989/2011/npg-18-989-2011.html

Date published: Jun 1 2011
Publication type: Working paper
 
Economists have long promoted fishery rationalization programs, but ITQs may fail to address the ecological consequences of fishing. Of particular concern is that economic incentives to harvest larger fish (due to size-dependent pricing or quota-induced discarding) can destabilize fish populations or lead to evolutionary changes. A substantial theoretical literature in economics has explored incentive problems in ITQ fisheries but has treated highgrading as part of the stock externality. We provide an alternative viewpoint in that the stock externality and the size-based incentives are two distinct externalities and thus require two distinct policy instruments. In this paper, we show that if managers know the price-by-size distribution and the size distribution of the population, total revenues and total catch (in weight) by vessel are sufficient statistics to design a schedule of revenue-neutral individualized landings taxes that eliminate the incentive to highgrade in an ITQ fishery. That is, landings taxes can be used to address the ecological consequences of fishing while using ITQs to address the open access stock externality. 

Smith. M and Gopalakrishnan. S , ‘Combining property rights and taxes to mitigate the ecological impacts of fishing’, in the Proceedings of the International Institute of Fisheries Economics and Trade 2011.

Date published: May 3 2011
Publication type: Journal article

Beach nourishment is a policy used to rebuild eroding beaches with sand dredged from other locations. Previous studies indicate that beach width positively affects coastal property values, but these studies ignore the dynamic features of beaches and the feedback that nourishment has on shoreline retreat. We correct for the resulting attenua- tion and endogeneity bias in a hedonic property value model by instrumenting for beach width using spatially varying coastal geological features. We find that the beach width coefficient is nearly five times larger than the OLS estimate, suggesting that beach width is a much larger portion of property value than previously thought. We use the empirical results to parameterize a dynamic optimization model of beach nourishment decisions and show that the predicted interval between nourishment projects is closer to what we observe in the data when we use the estimate from the instrumental variables model rather than OLS. As coastal communities adapt to climate change, we find that the long- term net value of coastal residential property can fall by as much as 52% when erosion rate triples and cost of nourishment sand quadruples.

Gopalakrishnan, S., Smith, M. D., Slott, J. M., & Murray, A. B. (2011). The value of disappearing beaches: a hedonic pricing model with endogenous beach width. Journal of Environmental Economics and Management61(3), 297-310. http://www.sciencedirect.com/science/article/pii/S0095069610001221