UC Berkeley

Policy makers are increasingly choosing market-based policies over command and control options. In this dissertation, I explore two instances of policy choices in environmental economics: a relatively novel market-based approach to handle congestion in transportation policy; and, government provision and control in the arena of water policy.

The first chapter estimates the traffic volume and travel time effects of the recently implemented road congestion pricing on the San Francisco-Oakland Bay Bridge. I employ both a difference-in-differences and regression discontinuity approach to analyze previously unexploited data for the two years spanning the price change and obtain causal estimates of the hourly average treatment effects of the policy. I find evidence of peak spreading in traffic volume and significant decreases in travel time during peak hours. I also find suggestive evidence of substitution to a nearby bridge that is not subject to congestion pricing. In addition, I show significant decreases in travel time variability. Using my results, I calculate own- and cross-price elasticities for trips due to the toll change and include back-of-the-envelope calculations for the welfare effects of the policy.

The second chapter I explore the impact of government water delivers in California's Central Valley. California's agricultural sector receives large quantities of irrigation water from the federal and state water projects. In recent years, there have been significant restrictions on these deliveries due to droughts and regulation to protect endangered species. This chapter empirically tests the hypothesis that higher deliveries to water districts in a given county lead to higher agricultural employment and cropped area and provides point estimates of this effect and uncertainty around the estimates. The results show robust evidence of a statistically and economically significant impact of irrigation water deliveries on employment and area. This effect is robust to different definitions of employment, alternate control groups, and different windows of data.