Benjamin Edelstein, PhD, Assistant Professor of Economics in the Quinlan School of Business at Loyola University of Chicago, will present the EEEP Seminar Series, “Water Scarcity Management and Housing Markets: Evidence from Water Impact Fees in Colorado” on October 22, 2025.
Abstract:
In this talk, Edelstein will discuss the effects of local water scarcity management on housing markets, water use, and welfare in Colorado. Rising costs of securing water for new developments have led water utilities to raise the water impact fees (WIFs) that home builders pay to connect new units to the water system, and to adopt variable WIFs based on expected water use. Using a novel dataset on water utility policies, housing outcomes, and aerial imagery with a staggered difference-in-differences approach, Edelstein finds that variable WIFs reduce new single-family lot sizes by 15% and irrigated areas by 30%, decreasing household water use by 15%. He also finds that WIFs are fully capitalized into house prices. To estimate the effect on total water use, housing supply, and welfare, he develops and estimates an equilibrium model of new single-family housing where landowners endogenously choose the lot size and irrigated area of new housing. He estimates that variable pricing policies have increased welfare by $120 million and consumer surplus by $3,500 per household. However, even though metropolitan-area level water use declines, changes to housing supply cause a local rebound effect that increases utility-level water use among adopting providers by 3%. In contrast, counterfactual policies that cap irrigated areas lower utility-level water use among adopters by 8%, but have limited welfare effects.
Bio:
Benjamin Edelstein is an Assistant Professor of Economics in the Quinlan School of Business at Loyola University Chicago. He earned his Ph.D. in Applied Economics from The Wharton School of the University of Pennsylvania in 2025. His research focuses on the intersection of the environment and cities, with emphasis on 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. Previously, Edelstein was an adjunct fellow and research associate at the American Enterprise Institute’s Housing Center. He holds a B.A. in Economics and International Relations from the University of Southern California.