Essays on Applied Economics and Econometrics: Decadal Climate Variability Impacts on Cropping and Sugar-sweetened Beverage Demand of Low-income Families

Abstract

This dissertation examines the economic impacts of ocean-related climate variability on U.S. crops and the effect sweetened beverage taxes would have on beverage consumption among low income food assistance program participants. The first essay estimates the effect of decadal climate variability (DCV) on crop yield, output, and revenue distribution moments controlling for temporal and spatial heterogeneity. The second essay estimates a demand system for beverages and the consumption effects of taxes on sugar-sweetened beverages (SSB).

The DCV analysis endeavors to advance the literature by econometrically estimating the impacts of these climate phenomena on crops. The estimation is done developing an empirical model that combines the direct and indirect effects of DCV. The direct DCV effects are estimated with skew-normal regression, allowing effects on skewness. The indirect DCV effects on crops are passed through regional hydro-meteorological variables such as temperature, precipitation, drought, and rainfall intensity. This study provides evidence that DCV phase combinations are related to the regional changes in temperature, precipitation, and extreme events and that this alters crop yields, output, and revenue across the United States. In turn adaptations are examined and we find DCV information could help farmers profitably alter crop mixes.

For the sugar-sweetened beverage investigation this study examines the demand elasticities of beverage purchases among low-income households participating in federal food assistance programs. Using scanner data from a New England supermarket chain with 3.8 million product-level purchases by over 47,000 households, we aggregate them by store level and month. We estimate a demand system model for eleven non-alcoholic beverages for different payment types. Our results suggest that an excise tax would be an effective means to reduce SSB consumption and increase healthier beverage purchases among low-income households.