NM Research 2022

The 1st Annual New Mexico Economics Research Day was August 17, 2023

Join us at the 2023 Research Day!

At the University of New Mexico Department of Economics, our faculty and graduate students engage in impactful research and outreach for the state and people of New Mexico. Below are a few projects Economics faculty and graduate students worked on in 2022.

New Mexico Prekindergarten and its Short-Term Effects on County-Level Female Employment and Child Maltreatment

A wide body of evidence demonstrates that participation in quality preschool improves short and long-term well-being across a wide range of educational, labor, and socio-economic dimensions. In response, New Mexico initiated its own state-supported half-day prekindergarten program for the state’s 4-year-olds in 2005. Since then, the state has dramatically expanded this program and now offers extended-day programs as well as early prekindergarten for 3-year olds. Consequently, the state is now one of the nation’s leaders in preschool access ranking 10th in the nation in state support for preschool and 13th and 11th in 4- and 3-year-old access to preschool.

The paper is a part of a larger project evaluating the association between New Mexico’s early childhood programs and county-level economic, educational, and child well-being. In the paper, we examine the near-term association between state prekindergarten support and county-level rates of female labor market participation and child maltreatment. We find that increasing county-level prekindergarten funding by $1 per capita is associated with an increase of the county employment rate for women with children under age 6 by 0.35% on average, with larger effects at lower levels of absolute per capita funding.

Each additional dollar per capita is also associated with a reduction in the county child victimization rate by 0.10 of a child per 1000, on average. The effects on child victimization increase with funding levels, with larger reductions in child victimization at higher levels of per capita prekindergarten funding. Evidence from the National Institute for Early Education Research (NIEER) and the New Mexico Legislative Finance Committee (LFC) demonstrate that New Mexico’s prekindergarten program is associated with improved school readiness upon entry into kindergarten and higher math and reading proficiency levels in third grade. Estimates on the rate of return for early childhood education benefits range from 6%-13%.

This project contributes to the evidence provided by the NIEER and LFC in a few ways. First, by examining prekindergarten support and associated outcomes at the county-level, we are able to demonstrate that the benefits of state prekindergarten can be observed not only for individual participating families and children, but also at the greater community-level. This is encouraging news from a policy perspective as it suggests that this program likely serves the interests of the state as a whole and not just individual beneficiaries. Second, female labor force participation and child maltreatment are not specifically targeted objectives of prekindergarten programs. Therefore, our findings suggest that New Mexico prekindergarten (and probably other correlated early childhood programs) has positive spillover effects on other aspects of well-being. This suggests that the rate of return for these programs are likely higher than previously thought.

Faculty Involved: Kira Villa

Graduate Student(s): Abhradeep Karmakar (PhD, UNM 2023), Kritika Sen Chakraborty (PhD, UNM 2023)

Ozone Pollution in New Mexico: An Economic Analysis of its Human Health Impacts and Damages

Ozone (O3) is a significant contributor to air pollution problems in New Mexico. Against a backdrop of increasing automobile and vehicular traffic and substantial growth in the production of oil and gas in New Mexico, there are challenges and opportunities for addressing the public health impacts and associated economic costs of ozone across the state.

The peer-reviewed literature shows that exposure to ozone can lead to respiratory diseases, asthma exacerbation, and premature mortality. These impacts all impose health-related damages to New Mexicans, especially among populations sensitive to air pollution, including seniors, children, and those with underlying health conditions.

In this white paper, we undertake a comprehensive three-phase study of ozone pollution in New Mexico. Phase 1 undertakes a multi-sector analysis of ozone precursors (NOx and VOCs) to identify locations of emissions sources and trends over time. Phase 2 investigates ozone concentrations directly to study the spatial and temporal trends of ozone in New Mexico. Finally, Phase 3 estimates the human-health impacts and associated dollar-denominated damages of ozone pollution by applying peer-reviewed and US Environmental Protection Agency (US EPA) methods and economic cost metrics.

Three key findings emerge:

1. The state-wide health damages of ozone pollution in New Mexico are estimated at $2.26 billion (in 2015 inflation-adjusted dollars) per year, on average, over the years 2011–2017. This is largely driven by excess premature mortality, which averages 259 ozone-related deaths per year between 2011-2017.
2. From 2014 to 2017, average ozone levels in New Mexico have improved. This downward trend in concentrations has resulted in fewer ozone-related health impacts and lower associated damages. As evidence of this, the state-wide premature mortality from ozone in New Mexico decreased 19% between 2014 and 2017 from 297 to 242 ozone-related deaths.
3. Based on our review of the literature, the largest sources of New Mexico’s ozone concentrations are from neighboring states (e.g., Texas, Colorado, Arizona) and Mexico. Additionally, the majority of the health impacts of ozone in New Mexico occur on days in which the concentrations (the daily maximum of 8-hour average concentration) are below the US EPA’s threshold of concern (set at 70 parts per billion since 2015). Both findings suggest limited potential, under current rulemaking authority, for the state to directly and significantly affect ozone levels and impacts occurring within New Mexico’s boundaries. However, policies targeted at ozone “hotspot” areas may still be impactful.

With several New Mexico counties (or regions within counties) near or out-of-compliance with the current US EPA ozone standard (i.e., Doña Ana, Eddy, Lea, Rio Arriba, Sandoval, San Juan, and Valencia counties), the regulatory focus is on mitigating emissions to prevent or achieve compliance. This work adds to this discussion a modeled state-wide estimate of the health consequences and damages of ozone pollution in New Mexico. Considerations of these impacts, including areas of ozone and health impact “hotspots,” are important factors that should influence how New Mexico approaches regulations and policies aimed at mitigating the harms from ozone pollution. We offer this white paper as admissible evidence towards ongoing air pollution policy discussions.

Faculty Involved: Andrew Goodkind, Benjamin Jones

Graduate Student(s): Suraj Ghimire (PhD, UNM 2023)

Legalization of Cannabis Home Cultivation and Residential Water Use

In early April 2021, cannabis consumption for adults 21 and older became legal in New Mexico in April 2021. Home cultivation of up to 6 plants per person and 12 plants per household following on June 29, 2021. The implications for residential water use were unknown due to a lack of information on the prevalence of home cultivation and the water requirements of growers.

This project studied the effects of legalization of home cultivation on water use using data from the Santa Fe Water Division of the Santa Fe Public Utilities Department and from a small fielded survey on home cultivation experience and preferences.

Results from analyses of the water utility data indicated an average monthly increase in water use of 36 gallons per household or 1.27 million gallons overall following legalization of home cultivation. Significant variation in the predicted effects existed across households and increased water use was concentrated in Fall 2021 and April 2022. The analyses also show a substantial increase in water use, presumably from COVID, in 2020. Limiting the implications of this study, it is possible that COVID-related increases in water use continued to a more limited degree in 2021 and could be confounding estimates of the effects of home cultivation.

The pilot survey fielded generated 27 responses, disproportionately from experienced growers. Key takeaways included a preference for indoor growing, use of public utility water, and that home-cultivated cannabis can readily compete with dispensary-sourced cannabis on quality and cost.

Policy recommendations include educating growers on low-water growing methods, e.g., indoor growing, evaluating relative water use between commercial and residential growers, identifying the limitations of current testing requirements for ensuring quality, and tracking and publicly sharing the dispensary price and quantity data necessary to understand New Mexico’s cannabis market.

Faculty Involved: Janie Chermak, Sarah Stith

Graduate Student(s):Swarup Paudel

Alcohol Regulation and Excise Taxes in New Mexico

In this report we study the regulation of alcohol in New Mexico. First, we provide a historical context for alcohol regulation in the US and discuss the effect that different types of alcohol policies have had. We describe how market-based mechanisms can be used to impact alcohol consumption and provide the economic theory behind alcohol quotas and taxation. We then collect empirical data to study the impact that recent alcohol excise taxes rate changes have had on the New Mexico craft beer industry. We find that

• over the last ten years there has been considerable growth in the New Mexico brewing industry,
• after changes in excise taxes, there was higher yearly growth in brewery production and a reduction in importation of out-of-state beer,
• the craft beer industry had a $165 million effect on the New Mexico economy in 2019, with more than $47 million coming from outside New Mexico,
• there is no evidence that excise tax policies taxes had an impact on alcohol-related arrests and traffic fatalities.

We also study the New Mexico wine industry and find

• small New Mexico wineries have experienced slow but steady growth,
• small wineries had a $48 million effect on the New Mexico economy, with more than $10 million coming from outside New Mexico.

In future research we will collect more detailed information about alcohol policy changes to better understand the degree to which the tax code thresholds impact production decisions. We will also examine the relationship between policy changes and alcohol-related traffic fatalities.

Faculty Involved: David Dixon, Brady Horn

Graduate Student(s): Ana Paula Milan Hinostroza

Compilation of New Mexico-Centric Economics Research by UNM Faculty, 2012-2023