Environmental Economics

Environmental impacts of a housing crisis

From the inbox:

Awhile back, you (or maybe John) [ed note--it was Tim] mentioned a call from NPR about the  environmental economics of the foreclosure crisis. At that time, you  didn't have any examples of obvious externalities from foreclosures.  Well, I just stumbled on a microbiological one: West Nile virus. As  foreclosed homes with swimming pools sit abandoned, the unmaintained  pools become huge mosquito nurseries. The mosquitoes that carry West  Nile virus seem particularly good at breeding in these artificial  ecosystems, and this has caused a significant spike in cases of the  disease in parts of California. You can read the CDC's report here:

http://www.cdc.gov/eid/content/14/11/pdfs/08-0719.pdf

Looks like an interesting intersection of real estate, environmental  economics, and health economics. Enjoy.

Thanks Alan.  You saved me some work on Friday morning.

Set your clocks back this weekend

From the daylight time FAQ:

Starting in 2007, daylight time begins in the United States on the second Sunday in March and ends on the first Sunday in November. On the second Sunday in March, clocks are set ahead one hour at 2:00 a.m. local standard time, which becomes 3:00 a.m. local daylight time. On the first Sunday in November, clocks are set back one hour at 2:00 a.m. local daylight time, which becomes 1:00 a.m. local standard time. These dates were established by the Energy Policy Act of 2005, Pub. L. no. 109-58, 119 Stat 594 (2005).

From the inbox:

How timely that a fresh study [see below] shows that daylight savings time is counterproductive!  The savings in lighting is more than offset by the extra cost of heating and cooling.  Sometimes symbols (nominally saving energy) are costly.  Now the case will have to be based on minimizing the time that kids have to be in the dark going to school or something like that.  This time of year the extra week of DST means that kids have one MORE week of dark mornings.

Happy Halloween

Welfare gain of lower gas prices

By the usual happenstance, my classes today were kidnapped by a not-totally-off-subject spur of the moment idea. We were doing consumer surplus in micro principles and benefit-cost analysis and I was getting the "wow, this is so totally irrelevant looks." So, I decided to answer what I thought was an interesting question: the price of gas has fallen from about $4 to $3 in the past few months, so what are the consumer surplus gains? Taking the abstract to the concrete ...

The data:

• Monthly gas consumed in August = about 280 million gallons [source]
• August price = about $4 [source]
• Short run gas demand elasticity = about -1/4 [source]

The elasticity formula gives the slope of demand:

• e = (dQ/dP)*(p/Q)
• -1/4 = (dQ/dP)*(4/280)
• dQ/dP = -17.5

Plug the slope into the assumed linear demand:

• P = a + (dP/dQ)Q
• 4 = a + (-1/17.5)*280
• a = 20

Determine consumption at P = 3:

• Q = (P - a)(dQ/dP)
• Q = (3 - 20)(-17.5)
• Q = 297.5

Plug into the change in CS formula:

• dCS = dP*Q + .5*dP*dQ
• dCS = 1*280 + .5*1*17.5
• dCS = 288.75

The monthly welfare gains are $288.75 million.

Windfall profit tax lovers celebrate

Breaking news from CNN.com:

Exxon Mobil Corp. set a quarterly profit record for a U.S. company today, surging past analyst estimates, CNNMoney.com reports. Exxon Mobil, the leading U.S. oil company, said its third-quarter net profit was $14.83 billion, or $2.86 per share, up from $9.41 billion, or $1.70, a year earlier. That profit included $1.45 billion in special items.

Wait, remind me again who bought all that gas?

Phil Weiss, analyst for Argus Research, said he doesn't expect Exxon to break any more profit records in future quarters.

"I don't expect the fourth quarter to be nearly as good as the third because of lower oil prices," said Weiss.

Does this mean we'll celebrate if low oil prices cause Exxon not to earn record profits in the 4th quarter?

CBO Director Orszag on climate economics

From the inbox:

The following has been added to CBO's Web site (www.cbo.gov):
Preparing for Our Common Future: Policy Choices and the Economics of Climate Change
http://www.cbo.gov/doc.cfm?index=9901

From the website description:

CBO Director Peter Orszag's October 2008 presentation for the Goldman Lecture in Economics, Wellesley College

The presentation focuses on some climate science, climate economics 101 and a cap-and-trade policy. Slides 22 - 27 provide a nice "illustrative example" of cap-and-trade for those unfamiliar with the workings of the policy.

Hopefully our joy is contagious

From the Columbus Dispatch (with sarcasm added by me):

Gasoline prices fell below $2 per gallon late yesterday in central Ohio, bringing back prices that in some cases are less than half of the highs seen during the summer.

Happy, happy, joy, joy...

Analysts, though, expect prices to hit bottom sometime soon.

Bummer.

"It means a lot of joy for a lot of people," said Roger Dreyer, president of the Ohio Petroleum Marketers and Convenience Association.

See, happy, happy, joy, joy.  Dancing in the streets.  Babies stopped crying...

Snow trends

"Climate change" from RaysWeather.Com Winter 2008-09 Fearless Forecast:

 

I would need to spend less than $13/year to buy permits for the CO2 generated by my driving

From the DOE's Energy Information Agency's Voluntary Report of Greenhouse Gases Program, I was surprised to learn that a gallon of motor gasoline generates almost 20 pounds of CO2. That sounds like a lot. But ...

If I drive my car 10,000 miles per year and get 25 miles per gallon, then I generate about 8000 pounds (i.e., 4 tons) of CO2 per year. If I was a RGGI member, I would need to spend $12.28 to purchase 4 permits for a ton of CO2 at a price of $3.07 per ton in order to continue to drive. And I thought my $40 TerraPass offset was cheap.

Note: Corrections to sloppy math/conclusions welcome!

Externality watch: marathon edition

Thousands of unusually fit tourists will descend upon New York this week to make any Park Avenue resident swoon. It's marathon week in NYC, and externalities galore.

First, there's the road closings all along the course, although it's unclear whether that's a net negative or positive. Drivers won't like it, but the million or so spectators surely appreciate it. The same should go for many restaurants along the way. The New York Times even provides a guide on "What to eat if you don't have to run." (I wonder how marathoners feel about that, knowing they are passing on a chance to stop at Cafe Sabarsky.)

The New York Times, ever the spoiler, provides three more reasons to worry about marathon-related externalities. There's packed marathons putting a damper on your time:

[S]he ran shoulder-to-shoulder with other runners through Mile 18. She said she was “up on lawns, weaving in and out of people and wasting a lot of energy,” because the course was so packed.

There's food intake:

“Before, food and wine were the dominating things in my life” ... ,

never mind that he's still

defying the usual culinary doldrums of marathon training and instead finding his way to the finish line on a diet of rib-eyes, cured pig jowl and even Dom Pérignon.

Last but not least, there's everyone else around the marathoner-in-training:

“I miss my guestroom, which has become the garage and smells like a locker room,” she said in an e-mail message. “I miss talking about things other than Harlem hill repeats, and I wish we had put a down payment on an apartment with the money he spent on his stupid custom bike.”

Then, of course, there's health effects -- some negative, but mostly positive, I assume. Has anyone ever tallied these up and put a dollar value on a mile-long run?

And no, I'm not running this week's New York marathon, although I really have no excuse. We live a block from the finish line. Next year...