Environmental Economics

Ug99 is not another Neil Diamond cover band*

And you thought food prices were high now?

The United Nations Food and Agriculture Organization (FAO) warned in March that Iran had detected a new highly pathogenic strain of wheat stem rust called Ug99.

The fungal disease could spread to other wheat producing states in the Near East and western Asia that provide one-quarter of the world’s wheat.

*I know UB40 isn't a cover band.  But their most popular song--at least in the U.S., and really, where else does music matter?**--was a cover of Neil Diamond's Red, Red Wine.  "Red, Red Wine you make me fell so fine, you keep me happy, all of the time"...then there's something about a monkey.

**I'm joking international readers. 

Student question on farm subsidies

From the inbox [edited for length]:

Dr. Haab

My name is [blank] and I was in your AED Econ 200 class this past fall quarter. One of my classes this quarter was Rural Sociology 378 which focuses on globalization of the world's economy and how it affects the rural populations of countries...My professor proceeded to tell the class that the main cause of [the expolitation of Jamaican grain farmers] was the farm subsidies given to US farmers...I was wondering if maybe you had any more information regarding subsidies (how they work, who gets them, why they are good/bad). I feel that they are a good thing for most US farmers. I know the professor got some of the information wrong and I called him out on it but I feel really uneducated about them...I wanted another opinion on the issue because my rural sociology teacher is obviously not an economics professor. I'm just curious to hear your take on the issue of farm subsidies.

You asked for it...

Friday Beer Post

My favorite new retirement planning web-site.

Env-Econ 101 Case Study: Inelastic Supply

We spend a lot of time talking about the elasticity of demand: That is, how consumers react to higher (or lower) prices.  Just as important, but less often mentioned--probably because it's harder to measure--is the elasticity of supply:  How does the amount producers produce react to higher prices?

First, some motivation:

Some kinds of fertilizer have nearly tripled in price in the last year, keeping farmers from buying all they need. That is one of many factors contributing to a rise in food prices that, according to the United Nations’ World Food Program, threatens to push tens of millions of poor people into malnutrition.

The failure of U.S. ethanol policy

Sometimes ecological economists sound like real economists*.  That is, every once in a while they make sense.  From Lester Brown and Jonathan Lewis in today's Washington Post:

Taking these together -- the environmental damage, the human pain of food price inflation, the failure to reduce our dependence on oil -- it is impossible to avoid the conclusion that food-to-fuel mandates have failed. Congress took a big chance on biofuels that, unfortunately, has not worked out. Now, in the spirit of progress, let us learn the appropriate lessons from this setback, and let us act quickly to mitigate the damage and set upon a new course that holds greater promise for meeting the challenges ahead.

Happy Earth Day.

*Relax, I'm joking.

Quote of the Day

"We need a real world and not the world of economic theories..."

U.N. Secretary General Ban ki-Moon, on world food price inflation.

Ethanol Dominoes: Are corn ethanol subsidies really taxes on the poor?

A student came in my office last week and asked: Aren't ethanol subsidies just implicit taxes on the poor?  I thought about it for a minute, then said, "Yep."  The United Nations World Food Programme agrees--sort of:

The demand for food as an input into energy production, whether it's biodiesel or bioethanol or any of these, is a global phenomenon. And it affects everything from palm oil to cassava to everything else … There isn't much marginal room in the global food supply system. ...Now, there's a point at which it doesn't economically make sense to buy food as an energy input. It's pretty low; it's apparently when oil hits about $70 a barrel. So anything above that makes food a very viable energy production input.

In other words, higher subsidies for ethanol lead to less food at higher prices.  Subsidies for ethanol are an implicit tax on food.

Who pays a tax? A case study (pun intended)

I usually apologize when a post isn't really environmentally oriented, but when a story serves to illustrate a point I tried to make last week and hits figuratively close to home, I gotta go with it.  From the Mercury News (via Drudge):

Joe Six-pack will have to pay a lot more to get his buzz on if  Assemblyman Jim Beall has his way.

The San Jose Democrat on Thursday proposed raising the beer tax by $1.80 per six-pack, or 30 cents per can or bottle. The current tax is 2 cents per can. That's an increase of about 1,500 percent.

So who pays the tax? 

Friday Beer Post

Ummmm...John? 

According to the study, published in February in Oikos, a highly respected scientific journal, the more beer a scientist drinks, the less likely the scientist is to publish a paper or to have a paper cited by another researcher, a measure of a paper’s quality and importance.

Oddly enough, the more beer I drink the more likely you are to read my posts.  Strange.

Coffee Break

Not sure why, I just liked this story.

Warning to Starbucks junkies who usually get a fix on their way home from work: You're out of luck on Tuesday.

Starbucks, which last week announced 600 layoffs, plans to temporarily close its 7,100 U.S. stores on Tuesday for three hours of employee training.

The coffee chain said the in-store training program which will begin at 5:30 p.m. local time, would foster enthusiasm in its 135,000 U.S. employees and improve the quality of drinks made by Starbucks baristas.

...

Dunkin' Donuts - "to ensure that no coffee lover is denied a delicious espresso-based beverage" - announced that it will offer small lattes, cappuccinos or espresso drinks for a promotional price of 99 cents on Tuesday from 1 p.m. to 10 p.m.

In related news, all other economics and environmental blogs will double their registration fees immediately.  To ensure that no env-econ lover is denied a delicious env-econ-based experience, John and I will continue to provide our content for free.