Oil and Water: Essays on the Economics of Natural Resource Usage

Abstract

As the developing world continues its pace of rapid growth and the threat of climate change intensifies, the economics of natural resource usage become increasingly important. From the perspective of both economic efficiency and distributional equity, effective policy design is correspondingly urgent. Market failures such as imperfect competition, externalities, and incomplete information plague resource markets everywhere; and both initial endowments and policy interventions often have regressive incidence. I shed light on some of these issues by studying the economics of natural resource usage in two separate empirical contexts. The first is the market for automotive fuel in Spain; I measure pass-through -- the degree to which retail fuel stations "pass through" diesel taxes to final consumer prices -- and use it assess the distributional impacts of energy policy. The second is the Ganga River Basin of India; I estimate the impacts of environmental regulation on river water quality and infant mortality. In both contexts, I utilize estimates of policy impacts to examine the underlying mechanisms by which affected consumers and suppliers of natural resources make decisions.