Environmental Economics

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From the inbox:

On Sept. 29, 2010, the website www.DeepwaterHorizonResponse.com will transfer to www.RestoreTheGulf.gov.

You are receiving this e-mail because at one time you signed up to receive e-mail notifications from the Deepwater Horizon Response website. While the response to clean-up and limit environmental damage from the spill continues, ongoing recovery and restoration work will grow. Therefore the www.RestoreTheGulf.gov website will continue to bring you important information about the federal government's efforts and we will cease using the DeepwaterHorizonResponse.com site. RestoreTheGulf.gov will use a new system to distribute e-mail alerts.

IF YOU WANT TO CONTINUE to receive e-mail alerts and news about the BP oil spill and the ongoing administration-wide response, take no action and you will keep getting your subscription.

IF YOU WANT TO STOP getting e-mail alerts, please opt out now and your information will be removed from the distribution.

Anyone who has not opted out of e-mail by Friday, Sept. 24, 2010, will have their account moved to the www.RestoreTheGulf.gov domain.

Between May 24 and today I had received over 600 Deepwater Horizon emails!

Cartoon of the Day

Source: Funky Winkerbean

BP blowout roundup (all in one article)

Good news (Oil in Gulf ...):

The government is expected to announce on Wednesday that three-quarters of the oil from the Deepwater Horizon leak has already evaporated, dispersed, been captured or otherwise eliminated — and that much of the rest is so diluted that it does not seem to pose much additional risk of harm.

A government report finds that about 26 percent of the oil released from BP’s runaway well is still in the water or onshore in a form that could, in principle, cause new problems. But most is light sheen at the ocean surface or in a dispersed form below the surface, and federal scientists believe that it is breaking down rapidly in both places. ...

A clarification from Sunday. We're #1 at sea:

The government announced early this week that the total oil release, from the time the Deepwater Horizon exploded on April 20 until the well was effectively capped, was 4.9 million barrels, plus or minus 10 percent. That estimate makes the Deepwater Horizon disaster the largest marine spill in history. It is surpassed on land by a 1910 spill in the California desert. ...

Seafood:

Testing of fish has shown little cause for worry so far, and fishing grounds in the gulf are being reopened at a brisk clip. At one point the government had closed 36 percent of federal gulf waters to fishing, but that figure is now down to 24 percent and is expected to drop further in coming weeks.

States are also reopening fishing grounds near their coasts. The big economic question now is whether the American public is ready to buy gulf seafood again. ...

Static kill:

Through the afternoon, in what is known as a static kill, engineers pumped mud weighing about 13.2 pounds per gallon at slow speeds from a surface vessel through a pipe into the blowout preventer on top of the well. If all goes well, cement may be applied over the next few days. But officials said they could be confident the well was plugged only when one of two relief wells now being drilled was completed, allowing the well to be completely sealed with cement.

Grrr: "failed valuation techniques" (e.g., contingent valuation) on NPR

From the Friday Podcast:

What’s the price of a pelican? The total for a turtle? The dollars for a dolphin?  Its not a philosophical question anymore. The BP oil spill killed hundreds of these animals, and the Feds want to make darn sure that BP pays the total bill.  But coming up with a precise economic value for wildlife has stymied economists and scientists for decades. There’s no market for most of these animals. No catalog for endangered species. No eBay or Craigslist for migratory birds. ...

Don’t tell an economist that you can’t  put a value on the invaluable.  They’ll come up with an entire discipline to do it.  It’s called contingent valuation, and  the theory is that if you ask the right way, people can asses how much a public resource is worth. We talked to the man who put a price tag on a wild duck,  Gardner Brown, of the University of Washington.  He used a survey of hunters to find out how much they would pay to take home an extra bird.  Could we use the same techniques to value a pelican?   In theory, Brown says.  But he notes that it would be difficult to get people to set aside their emotions about the oil spill and isolate how much they would actually pay to save the pelicans. ...

The Exxon Valdez contingent valuation study did it by developing a scenario to avoid a future Prince William Sound oil spill. Gardner Brown is correct in saying that it is difficult to tell people how to respond to contingent valuation questions, but the method has been developed to the point where those emotional responses can be analyzed to purge the emotions.

All these failed valuation techniques are familiar turf for scientists at the U.S. Fish and Wildlife service.  They’ve tried them all too.  Roger Helm with the agency says that they used to go to biological supply firms to put a price on dead fish.  They did surveys after the Exxon Valdez oil spill to value the wildlife lost.  But these days, the Feds do something different. Instead of telling a company what they have to pay for dead animals, they just tell them they are required to restore the population of the animal. 47 dead pelicans?  The company has to pay for enough habitat or conservation programs to bring back 47 pelicans.  And that could be cheap or very, very expensive.   Helm has an elegant answer to the question of what a pelican is worth:  the price of a pelican is exactly one pelican.

All these "failed valuation techniques"? With all due respect, you sir, are an idiot. And I say that with all due respect.

Dare I mention the temporal problem with replacing a pelican with a pelican?

Out of context comparisons are particularly not useful

Posted by Alex Tabarrok on July 19, 2010 at 09:45 AM (Number of birds killed):

Number of birds killed by the BP oil spill: at least 2,188 and counting.

Number of birds killed by wind farms: 10,000-40,000 annually.

Number of birds killed by cars: 80 million annually.

Number of birds killed by cats: Hundreds of millions to 1 billion annually.

Don't worry there is some good news.  

Number of birds killed by fisheries: tens to hundreds of thousands annually (fortunately for the birds, some of these fisheries are now shut down).

A couple of the comments:

Justin: I think this post really does a lot to help explain why some people hate economists.

Luis Enrique: ... It's possible Alex does mean "... and so the BP spill is no big deal!", in which case fire away... Alex can you confirm: are you the idiot the above commentators take you to be?

The Lollypop Guild?

Lots of good stuff at EDF's R&R blog

On top of Hurricane Katrina:

Now, the Deepwater Horizon disaster threatens both the energy and seafood industries like nothing before. The moratorium on fishing in the Gulf, coupled with the moratorium on drilling in the Gulf, have plunged the economy into chaos. Where there were once active fishing docks, boats now idle under the summer sun. Coastal communities that once catered to the needs of offshore rigs have seen businesses fold, and local tax revenues have taken a hit at a time when Baton Rouge has instituted sharp cutbacks in state spending.

via blogs.edf.org

Just $300k and a ham sandwich from $100m

Some firms don't necessarily fully respond to incentives:

The Obama Administration today sent a fourth bill for $99.7 million to BP and other responsible parties for response and recovery operations relating to the BP/Deepwater Horizon Oil Spill.

As a responsible party, BP is financially responsible for all costs associated with the response to the spill, including efforts to stop the leak at its source, reduce the spread of oil, protect the shoreline and mitigate damages, as well as long term recovery efforts to ensure that all individuals and communities impacted by the spill are made whole.

To provide full transparency of the ongoing efforts and to ensure that the American public is not held accountable for the costs of response and recovery activities, the Federal Government bills BP and the other responsible parties regularly for costs incurred by the Federal On-Scene Coordinator to support Federal, State, and local response efforts and ensure the Oil Spill Liability Trust Fund is reimbursed on an ongoing basis.

This is the fourth bill the Administration has sent to date. BP and other responsible parties have paid the first three bills, totaling $122.3 million, in full.

via app.restorethegulf.gov

Tim hadn't even taken comps yet

From the inbox:

Dear Sirs:

I am reading a paper from 1992, and I came across this quote from a section on "Legal Liability as an Economic Instrument for Environmental Protection":

The imposition of such liability effectively places an "expected price" on polluting activities.  The ongoing suits, for example, following upon the massive Exxon-Valdez oil spill suggest that such penalties will surely exert pressures on potential polluters to engage in preventative measures. (693)

Source: Cropper, Maureen L. and Wallace E. Oates.  1992.  "Environmental Economics: A Survey."  Journal of Economic Literature, 30 (2): 675-740.

(They also breathe a sigh of relief that env econ is finally accepted now that "so-called" contingent valuation has been developed to everyone's satisfaction.  Ok, maybe not in so many words . . . )

Thought you might find it as amusing as I did.

Yep. We posted this one under "Humor" and a new category: "Deepwater Horizon blowout."