Lab Seminar: Will Troske and Jordan Trinh

This week, ARE PhD candidates Will Troske and Jordan Trinh each presented their ongoing work to the Lab.

Will's work focuses on the behavioral impact of sulfur fuel content regulations in maritime shipping. In 2012, the US and Canada implemented a technological regulation, called the ECA (emission control area), in their exclusive economic zone to reduce emissions from ocean-going ships. The ECA required ships to use low-sulfur fuel, increasing a ship’s main operating cost. The EPA estimated that the operational cost of ships would increase by $18 for a twenty-foot equivalent container. Operation costs, however, are not the only costs of regulation. In international trade, fuel and capital are substitutes, and an increase in fuel prices leads to demand for larger (more fuel-efficient) ships. In this paper, I use data from 2006 to 2016 on commercial container ships’ calls to US ports, from the Army Corps of Engineers, to construct a panel at the port-quarter level that tracks ship size and port exposure to the ECA for all US ports. Port exposure measures the average time a ship operates in ECA-regulated waters before reaching said port. I use the variation in port exposure to estimate the relative change in ship size for more exposed US ports after the ECA. I find the ECA led to about 3% larger ships for ports further along container routes. This is driven by larger ships shifting to serve the more exposed US ports. These findings show that fuel regulations favor larger ships, with implications for container movement along trade routes and investments for port expansions.

Jordan's research focuses on intertemporal trading in the California water market. California has one of the most variable climates in the world, often fluctuating between flooding and extreme drought. One way to smooth this variation in water supply has been to increase intertemporal trade by making use of underground aquifer space through a practice known as groundwater banking. However, through depositing and withdrawing water from a bank, bank partners from many disparate parts of the state can affect the groundwater levels for water users near the bank. This work seeks to estimate the externalities caused by groundwater banking, primarily through the channel of groundwater levels.