Environmental Economics

I hate to go all free market on you but ...

Is there a market failure in the tree nursery industry?

Insurance claim money earmarked for rebuilding a tornado-devastated tree nursery in eastern Kentucky may be spent instead to help close a state government budget gap, putting the nursery’s future at risk.

The nursery, one of two operated by the Kentucky Division of Forestry, was flattened by the March 2012 tornado that raked West Liberty in Morgan County. It produces more than 1 million seedlings a year, all native varieties chosen to match the region’s climate and soil. ...

The nursery offers native trees at a reasonable price, said Henry Duncan of Versailles, a past president of the Kentucky Woodland Owners Association, which has about 200 members.

The bare-root seedlings are available in bundles of 10 or 100 and range from $30 to $48 per bundle, according to the agency’s website.

Duncan said some of the work at the nursery seeks to bring back the American chestnut, which was wiped out by a blight in the early 1900s. The nursery also grows most of the trees for planting on reclaimed strip mines, he said.

The only other state nursery, in Western Kentucky, could not meet statewide demand, he said. Commercial nurseries out of state are more expensive and don’t usually offer seed stock that comes from Kentucky trees, which makes them better suited for survival in Kentucky, he added.

via www.courier-journal.com

I can't think of any reason not to expect entry into this market by a private Kentucky nursery firm. The resulting seedling price might be higher without government subsidies but there may be little reason to subsidize tree growing. 

That is, unless the carbon sequestration benefits exceed the cost of the subsidies. But I'd argue this is a role for the federal government and not the states. And those benefits are likely less than the costs since climate change is a global problem, the difference between the number of subsidized public seedlings and private seedlings is likely to have small climate impacts and the impacts are way down the road. 

"Paying Ecuador to Protect the Rainforest"

Common Resources:

A recent episode of NPR’s Planet Money discussed Ecuador’s proposed solution to a national dilemma: the fact that a massive oil discovery and a national park happen to be in the same place. Ecuador’s proposal is to forswear drilling – but only if other countries donate half the value of the oil in aid (about $3.6 billion). For the show, Planet Money journalist David Kestenbaum interviewed RFF University Fellow and Duke University professor Billy Pizer, formerly Deputy Assistant Secretary for Environment and Energy at the Treasury Department. Here’s how NPR summarized his comments:

“The joke we always used to always talk about was, you know, ‘Give me the money or I’ll shoot the trees,’ . . . Pizer says he’d love to keep the park safe. But he says the proposal worried him as a potential precedent that would encourage other countries to threaten to destroy their own forests unless the world pays up.

The show is worth a listen. But, inevitably, material gets left on the cutting room floor. Here are more of Pizer’s views on the Ecuadorian proposal. 

Dang fine trees

I'll be making a site visit to these trees over the holidays:

After more than a decade of work by Kentucky highway officials and more than $850,000 spent in federal and state money redesigning U.S. 42 in Prospect, city officials now say they don’t want the project as it stands.

There is something they want more: Trees.

Trees are one of Prospect’s main attractions, and the state’s widening plan would wipe out at least 200 mature trees, including oaks and maples, on the mostly residential east side of U.S. 42, officials said. The City Council recently adopted a resolution opposing the proposal. ...

The plan called for widening about a mile of U.S. 42 through Prospect — between Harrods Creek and River Road — and originally included a grassy median with turning lanes. City officials, business leaders and residents had pressed for the widening — saying it was needed to handle traffic, which has almost doubled since 1991.

But now Mayor Todd Eberle said the widening would “destroy” Little Hunting Creek Park and move the roadway almost to the doorstep of City Hall. He said attitudes about the widening project have changed as Prospect has evolved during the past decade.

The only alternative — widening the road on the north side — would wipe out parking lots and cost more because utilities would have to be moved, and city officials have said some businesses might have to relocate. ...

The state highway plan budgeted up to $3.3 million for the project, which was also noted as a high priority in the plan. The current widening proposal would cost $2.4 million, transportation officials have said.

Other proposals, which included widening on the north side, ranged from $4.9 million to more than $11 million.

via www.courier-journal.com

Here is what I wrote before I continued reading:

Grrrrr ... HOW MUCH MORE WOULD IT COST!!! Taking the difference and dividing by 200 I could boast that I know how much each tree is worth when I visit my family while driving that stretch of 42.

I do this all the time, read a bit of something I find interesting, excerpt it, write something (that I think is) clever, realize I should read the rest of the article before posting and making a fool of myself, finding that my snark is answered later in the article, delete what I first wrote and then write something not so fun. Well, for some reason I don't have the heart to delete the above text. 

Anyway, each tree might be worth between $12,500 and $43,000. 

The Nobel Prize in forest economics?

Congratulations to the authors! From the inbox:

We are glad to announce that the 2012 Sören Wibe Prize was awarded to Christopher C. Moore, Thomas P. Holmes and Kathleen. P. Bell, for their article "An attribute-based approach to contingent valuation of forest protection programs":

Journal of Forest Economics 17 (2011):35-52

The article provides a well-structured, well-written, and innovative piece of research in applying contingent valuation of welfare effects of forest conservation in the special case of Eastern Hemlock in the United States. The article presents an "attribute based" CV method to study the welfare gains, to carry out cost-benefit analysis, and to inform the distribution of mitigation effort over land units. One of the key questions studied is the preference of the citizens concerning ecologically valuable sites versus recreational sites. The results indicate, interestingly, that people are willing to provide "substantial support" to programs that protect ecological sites, in spite of their description "difficult for visitors to access". For practical policy planning, the results are interesting. First of all, welfare effects from conservation clearly exceed the low conservation costs, and almost any program with positive welfare effects would pass the cost-benefit test. More importantly, when the welfare effects of the weighted optimal allocation of conservation sites are compared to the actual program, it turns out that the current allocation is strongly biased towards human-use sites as compared to a much larger share of ecological sites of the optimal allocation. The study demonstrates that although many conservation programs may pass the cost-benefit tests, significant welfare gains are possible if the preferences of the public are correctly accounted for in the allocation of conservation measures to forest sites with different environmental benefits.

The 2012 Award Selection committee comprised of: Sashi Kant, Jari Kuuluvainen and David Newman (chair).

Thanks to the support of Sören Wibe's family, the Journal publisher Elsevier, and the Department of Forest Economics at the Swedish University of Agricultural Sciences, the prize winners will receive a cash amount of € 2 000, and will be invited to give a lecture at the Swedish University of Agricultural Sciences.

Yours sincerely,

Runar Brännlund, Ola Carlén, Peichen Gong
Editors Journal of Forest Economics

 

A video worth a hundred trees

Following up on yesterday's post on the Space Shuttle Discovery and the plan to remove 100's of trees to facilitate the move of the Space Shuttle from LAX to the California Science Museum, here is a video that shows the extent of the tree removal project (along with some of the potential costs and benefits):

 

 

That's $160,784 worth of trees*

Sheesh, why do I have to learn about a national environmental travesty from the Brits**?

It was billed as a triumphant parade for a big chunk of history, but the space shuttle Endeavour's procession through Los Angeles has come with a catch: the city must chop down 400 trees.

Authorities have started felling some much-loved trees to let Nasa's pride and joy rumble from LAX through streets and boulevards to its final home at the California Science Center.

Some residents have protested against the sacrifice of pines, myrtles and magnolias and other species lining the 12-mile route, saying it's a high price for a two-day parade dubbed "mission 26", following the shuttle's 25 missions orbiting Earth.

...

"The move of the shuttle allows the city to be a part of this national endeavor," Sabrina Barnes, Inglewood's director of parks, recreations and library services, told the LA Times. "And gives the chance to address problematic trees that have eroded the landscape."

I have a feeling "problematic" means "ugly, in my snooty suburban elitist opinion."

*I'm extrapolating.

**Note, I have nothing against the English, I just get perverse pleasure from referring to the esteemed English gentleman with whom I work and who pointed me toward this story in The Guardian, a Brit, and then watching him bristle in his fine English way.

A 38.3" diameter Northern Red Oak on a midwest college campus is worth exactly $401.96 per year

I was recently made aware of signs going up on OSU's campus listing the annual Ecological Benefits of trees on campus (apparently this has been going on for a while, but I rarely venture outside my building, unless I'm getting in my car).  Here is a sign for a Northern Red Oak near my building:

Unfortunately the sign has no information on how the benefits are calculated other than a reference to the website treebenefits.com/calculator which at press-time isn't working.  Nevertheless, this seems like a great project--or at least a discussion example--for a cost/benefit class.  Some questions come to mind:

• What are the appropriate methods for valuing the multiple ecological benefits of campus trees?
• Are benefits additive across services?
• Are benefits additive across trees (that is, is the Northern Red Oak next to the one in this picture worth $402 also? and If so, are the two together worth $804?)
• What is the present value of the annualized stream of benefits (quick estimate--assuming an infinite life for the tree and a 5% dicount rate, the annual benefits of $402 per year in perpetuity are worth $8,040 today)?
• What is the variation in the estimate?
• Why was I not asked to help make these signs?

Feel free to add your questions in the comment section. 

 

"You can't put a price on a Truffula tree" ???

From the inbox:

Hello!  Thought you might enjoy CollegeHumor Original animation, “The Conservative Lorax,” a satirical take on how the story of The Lorax might be presented by those who are not so environmentally friendly...Say, on something like the “Fox Seuss Network.”  Here’s a link to check out what The Lorax could be like as a Wall Street suit: http://www.collegehumor.com/video/6804067/the-conservative-lorax

More Ash Holes* Found in Ohio

Ohio Department of Agriculture officials have confirmed the presence of emerald ash borer in Belmont, Crawford, Knox and Madison counties.

Residents are being urged to use caution when transporting firewood to help protect against the artificial spread of this and other insect pests.

In June of 2011, the Ohio Department of Agriculture’s emerald ash borer quarantine was officially rescinded because the pest has been found throughout most of the state, including Wayne National Forest.

via www2.nbc4i.com

That's the 'Screw It, We Give Up' policy solution.

*I'm not sure that joke will ever get old

I don't consider myself a treehugger or a sentimentalist, but this made me a little bit sad

It had a good run, that sycamore tree.

For nearly 300 years, it has stood watch over the north fork of Indian Run.

Yet a single lightning strike was all it took to cripple what the locals say is by far the largest and most majestic sycamore in Dublin’s 56-park, 1,400-acre public recreation system.

The tree, just north of the water tower at Avery Park, will have to come down. It’s cordoned off now, and a portion of the walking trail that snakes through the park is closed. The situation is too precarious to take chances, said Fred Hahn, Dublin’s director of parks and open spaces.

The tree was hit by lightning during a severe thunderstorm on the evening of March 18. Washington Township fire crews responded to a call of “a smoking tree.”

Crews arrived to find that the sycamore, with its nearly 8-foot-diameter base, was hollow and the fire was inside. They pumped water through holes already in the tree, but that didn’t work.

Hahn said they decided to just let it smolder for days, hoping the fire would burn only the already-dead wood inside and that perhaps the tree could be saved.

But no luck. The interior temperature of the tree topped 1,100 degrees; the bark still registered 450 degrees days after the strike. All the stress proved too much, and its massive limbs began to heave. One snapped, then two. Then another and another.

By Friday, parks officials knew: The tree would have to go.

via www.dispatch.com