UNIVERSITY PARK, Pa. — Benjamin Edelstein, an assistant professor of economics at Loyola University Chicago, will lead a seminar at Penn State on the effects of water-scarcity management in part of the western United States.
His free talk — “Water Scarcity Management and Housing Markets: Evidence from Impact Fees in Colorado” — is scheduled for noon on Wednesday, Oct. 22, in 157 Hosler Building on the University Park campus. It’s part of the fall seminar series hosted by the Initiative for Energy and Environmental Economics and Policy (EEEPI).
Edelstein will discuss his research about water impact fees (WIFs) paid by homebuilders to connect new units to a water system. Utilities have increased the fees because of higher costs to secure water for new developments, he said.
By analyzing water utility policies, housing outcomes and aerial imagery, Edelstein found that variable WIFs — based on expected water use — reduce lot sizes of single-family homes as well as irrigated areas. Household water use decreases by 15% amid the variable pricing, he said.
“To estimate the effect on total water use, housing supply and welfare, I develop and estimate an equilibrium model of new single-family housing where landowners endogenously choose the lot size and irrigated area of new housing,” Edelstein said. “I estimate that variable pricing policies have increased welfare by $120 million and consumer surplus by $3,500 per household.”
While his work shows overall water usage declining at the metropolitan-area level amid variable WIFs, a rebound effect — that is, changes to the housing supply — increases water use at the utility level among adopting providers. Edelstein also notes that caps on irrigated areas lower utility-level water use among adopters, but have limited effects on welfare.
Edelstein’s appointment at Loyola University Chicago is in the Quinlan School of Business. His research focuses on the intersection of the environment and cities, emphasizing urban, environmental and public economics. His work has examined how local management of water scarcity affects new housing supply and residential water use in Colorado; the mobility patterns of residents moving into and out of gentrifying neighborhoods; and the origins of risky mortgage lending during the global financial crisis of the late 2000s.
Edelstein is a former adjunct fellow and research associate at the American Enterprise Institute’s Housing Center.
About EEEPI
Established in 2011, the Initiative for Energy and Environmental Economics and Policy operates as a University-wide initiative at Penn State with support from the Earth and Environmental Systems Institute and the Institute of Energy and the Environment. EEEPI seeks to catalyze research in energy and environmental systems economics across the University and to build a world-class group of economists with interests in interdisciplinary collaboration.