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The Department of Environmental Economics and Management

The Robert H. Smith Faculty
of Agriculture, Food and Environment
The Hebrew University of Jerusalem

PO Box 12, Rehovot 76100
Fax: 08-9466267

Department Head:
Prof. Ayal Kimhi, Tel: 08-9489376

Head of the teaching program:
Dr. Ohad Raveh, Tel: 08-9489373

Meital Kappach, Tel: 08-9489230


Heiman, A. ; Just, D. R. Nationalism in the produce aisle: Using country of origin labels to stir patriotism and animosity. Q Open 2021, 1. Publisher's VersionAbstract
This study aims to determine how feelings of nationalism or patriotism for one's own country and feelings of animosity for countries that are in political conflict affect consumers’ willingness to refrain from buying products from various origins. Four hundred forty-two shoppers participated in a survey that included questions about ethnocentric and patriotic feelings and a choice task between local and foreign produce. We find that a significant proportion of Israeli consumers are not willing to buy imported produce from countries that are in conflict with Israel. The proportion of consumers who would not purchase imported produce increases substantially with the intensity of the conflict. Consumers who avoid buying produce from friendly countries are those whose ethnocentric and economic-centric relationship are strong.
Reardon, T. ; Heiman, A. ; Lu, L. ; Nuthalapati, C. S. R. ; Vos, R. ; Zilberman, D. “Pivoting” by food industry firms to cope with COVID-19 in developing regions: E-commerce and “copivoting” delivery intermediaries. Agricultural EconomicsAgricultural EconomicsAgricultural Economics 2021, 52, 459 - 475. Publisher's VersionAbstract
Abstract Coronavirus disease 2019 and related lockdown policies in 2020 shocked food industry firms? supply chains in developing regions. Firms ?pivoted? to e-commerce to reach consumers and e-procurement to reach processors and farmers. ?Delivery intermediaries? copivoted with food firms to help them deliver and procure. This was crucial to the ability of the food firms to pivot. The pandemic was a ?crucible? that induced this set of fast-tracking innovations, accelerating the diffusion of e-commerce and delivery intermediaries, and enabling food industry firms to redesign, at least temporarily, and perhaps for the long term, their supply chains to be more resilient, and to weather the pandemic, supply consumers, and contribute to food security. We present a theoretical model to explain these firm strategies, and then apply the framework to classify firms? practical strategies. We focus on cases in Asia and Latin America. Enabling policy and infrastructural conditions allowed firms to pivot and copivot fluidly.
Biyalogorsky, E. ; Heiman, A. ; Muller, E. The differential effects of time and usage on the brand premiums of automobiles. 2021. Publisher's VersionAbstract
We investigate how the status and functional benefits of cars’ brands lose value over time. Theoretically, we show that brands with a higher status, or that appeal to status-conscious consumers, exhibit steeper price decline over time. Empirically, we take advantage of the phenomenon of twin cars – pairs of car models that are nearly identical from a structural and mechanical standpoint, but that are sold under differing brand names – to disentangle the effects of physical wear and tear, which should impact both the premium brand and the corresponding standard brand similarly; and time-related price decline, which should affect each brand differently. The main result is that a premium car’s price declines much faster than that of the corresponding standard car (controlling for physical condition, mileage, and initial price). This result suggests that status declines faster than do functional attributes, and status seekers tend to replace their cars earlier.
Fleischer, A. ; Ert, E. ; Bar-Nahum, Z. The Role of Trust Indicators in a Digital Platform: A Differentiated Goods Approach in an Airbnb Market. Journal of Travel Research 2021, 00472875211021660. Publisher's VersionAbstract
We employed a differentiated goods market analysis where we utilized, in addition to the prevailing goods’ attributes, different types of the sellers’ attributes including trust indicators. We incorporated both sets of attributes into a structural model of the whole market including demand and pricing equations with the hotels as an outside good. Applying the model to Stockholm’s Airbnb market reveals that hosts’ attributes significantly affect market performance. Simulations of market scenarios show that the very high review scores and the Superhost certification help Airbnb compete with hotels and increase profitability. We also show that the “Airbnb plus” luxury program, which makes the apartments a closer substitute for hotels, leads to an increase in Airbnb’s market welfare. Our analysis provides a framework for understanding the full impact of the different attributes of the products, their providers, and their management in the sharing-economy accommodation market.
Dinar, A. ; Tsur, Y. The Economics of Water Resources: A Comprehensive Approach; Cambridge University Press: Cambridge, 2021. Publisher's VersionAbstract
Population growth and rising living standards, on the one hand, and changing climate, on the other hand, have exacerbated water scarcity worldwide. To address this problem, policymakers need to take a wide view of the water economy – a complex structure involving environmental, social, economic, legal, and institutional aspects. A coherent water policy must look at the water economy as a whole and apply a comprehensive approach to policy interventions. Written by two of the world's leading scholars on economics of water, this is the first graduate-level textbook on the topic. The book discusses water resource management within a comprehensive framework that integrates the different, yet highly entwined, elements of a water economy. It follows the steps needed to develop a well-designed set of policies based on detailed analyses of intervention measures, using multi-sectoral and economy-wide examples from a variety of locations and situations around the world.
Fan, J. ; Zhou, L. ; Zhang, Y. ; Shao, S. ; Ma, M. How does population aging affect household carbon emissions? Evidence from Chinese urban and rural areas. Energy Economics 2021, 100, 105356. Publisher's VersionAbstract
Population aging has become a salient demographic phenomenon in China, thus causing social and economic concerns. However, little is known about the impact of population aging on the environment. The available literature mainly emphasizes decreases in energy consumption or carbon emissions caused by population aging, conveying limited information about the impact of population aging on household carbon emissions. This paper explores the impact of population aging on household carbon emissions in both urban and rural areas of China, using panel data of 30 provinces over 1997–2017. The relationship between population aging and household carbon emissions is investigated with a threshold regression model and a two-stage instrumental variable regression model. The results show that urban population aging increases urban household carbon emissions at levels both below and above 0.083, while this positive impact is comparatively smaller when urban population aging is above 0.083. However, at the national level, rural population aging has no significant impact on rural household carbon emissions at the level below 0.066, while rural population aging significantly increases rural household carbon emissions at the level above 0.066. Rural population aging has a significant positive effect on the increase in household carbon emissions in northern heating areas, when rural population aging is both below and above 0.077. The analysis of the underlying mechanism identifies consumption structure and consumption level as intermediary factors that affect the nonlinear relationship between urban population aging and urban household carbon emissions. Furthermore, the income level also affects the nonlinear relationship between rural population aging and rural household carbon emissions.
Hatan, S. ; Fleischer, A. ; Tchetchik, A. Economic valuation of cultural ecosystem services: The case of landscape aesthetics in the agritourism market. 2021, 184, 107005. Publisher's VersionAbstract
Natural and agricultural landscapes provide a wide range of ecosystem services, among which are aesthetic landscapes. As these services have no direct market value, land use decision makers often ignore them in favor of urban sprawl, resulting in suboptimal resource allocation. Here, we suggest a novel method to evaluate the aesthetic landscape services of natural and agricultural ecosystems using the case of the agritourism market in Israel. We model the agritourism market as an oligopolistic market with differentiated products and formulate an equilibrium model with structural, double nested logit demand and pricing equations. The structural equations are expressed as a function of the attributes of the agritourism firm, among which are the components of landscape view. We use aggregate market data and GIS data to estimate the structural model. In the case of urban sprawl, the welfare loss is estimated at US$29,000–53,000 per km2, depending on the type of ecosystem that is forgone, whereas in agricultural sprawl over natural areas, the welfare loss is estimated at US$38,000 per km2. This welfare loss can be considered the economic value of landscape aesthetics services to the agritourism market. These findings illustrate the potential of using this valuation method for other ecosystems in other markets.
Perez-Sebastian, F. ; Raveh, O. ; van der Ploeg, F. Oil discoveries and protectionism: Role of news effects. Journal of Environmental Economics and Management 2021, 107, 102425. Publisher's VersionAbstract
Can oil discovery shocks affect the demand for protectionism? An intertemporal model of Dutch disease indicates that if the tradable sector is politically dominant then an oil discovery can induce protectionism. If the economy is also credit constrained, this effect is intensified upon discovery, but partially reversed when oil revenues start to flow. We test these predictions using 16.2 million, HS-6 level, bilateral tariff rates that cover 5718 products in 155 countries over the period 1988–2012, and data on worldwide discoveries of giant oil and gas fields. Our identification strategy rests on the exogeneity of the timing of discoveries. Our empirical results indicate that an oil discovery increases tariffs during pre-production years and decreases tariffs in the years to follow yet to a lesser extent, most notably in capital scarce economies with a relatively dominant tradable sector. Our baseline estimates indicate that a giant oil field discovery induces a rise of approximately 13% in the average tariff over the course of 10 years; this increase is approximately 2.5 times larger during the pre-production period when the oil discovery represents a pure news shock.