By: Tobias Börger, Nicola J. Beaumont, Linwood Pendleton, Kevin J. Boyle, Philip Cooper, Stephen Fletcher, Tim Haab, Michael Hanemann, Tara L. Hooper, S. Salman Hussain, Rosimeiry Portela, Mavra Stithou, Joanna Stockill, Tim Taylor, Melanie C. Austen
In: Marine Policy, Volume 46, May 2014, Pages 161-170.
Abstract: This paper scrutinises the use of ecosystem service valuation for marine planning. Lessons are drawn from the development and use of environmental valuation and cost-benefit analysis for policy-making in the US and the UK. Current approaches to marine planning in both countries are presented and the role that ecosystem service valuation could play in this context is outlined. This includes highlighting the steps in the marine planning process where valuation can inform marine planning and policy-making as well as a discussion of methodological challenges to ecosystem service valuation techniques in the context of marine planning. Recommendations to overcome existing barriers are offered based on the synergies and the thinking in the two countries regarding the application of ecosystem service valuation to marine planning.
The Bet is Yale University historian Paul Sabin's (no relation to Nick) telling of the story and political culture surrounding Paul Ehrlich and Julian Simon's 1980-1990 $1,000 bet over the Hotelling rule. OK, it wasn't really over the Hotelling rule, but it was about Hotelling-like predictions of changes in depletable resource prices. In particular, the bet focused on the change in prices of five metals (Copper, tin, chromium, nickel and tungsten--I think they made that last one up) over a 10 year period. Whack-job dooms-day ecologist Paul Ehrlich--OK, that's unfair to Ehrlich, he is a butterfly biologist, not an ecologist (is that biased?)--famously predicted throughout the late 1960's and 1970's the coming cataclysmic collapse of the Earth's environmental/ecological systems due to natural limits and exponential population growth.
In short, Ehrlich believed that humans are but one part of the broad ecosystem, and subject to all of the natural laws and limits that come with being part of that system--including species collapse due to exceeding the system's natural carrying capacity. Ehrlich was the loudest voice of the early zero-economic growth movement (and a contemporary of the Club of Rome and Limits to Growth). One observable indicator of Ehrlich's and his colleagues' dire predictions would be the Hotelling-like rise in depletable resource prices over time. As resources become more scarce (reach their natural limits), prices would have to rise. This is a somewhat ironic prediction from Ehrlich given the lack of price rationing in the Limits to Growth-type models of world collapse, but I digress.
Julian Simon, a mild-manned Chicago-trained University of Illinois professor of marketing (who eventually ended up in the University of Maryland School of Business), disagreed with Ehrlich's basic premise that population growth necessarily strained the natural limits of the ecosystem and instead argued that scarcity creates increasing opportunity costs and opportunities for investment, exploration, discovery, innovation and development of subsitute forms of capital. In short, Simon the economist argued that the simple form of Hotelling (prices rise in response to increasing scarcity) was correct, but the extension needs to be accounted for--increasing prices create incentives for the generation/investment/invention of alternative resources. Simon believes that increased in population actually increased general well being, increased the stock of human capital and would ultimately result in the creation of substitute pools of resources (whether natural or man-made). Simon believed that man-made capital would remain substitutable for depleted natural capital and resource prices would fall.
In the end, Simon won the bet and Ehrlich paid off without much fanfare. But in Sabin's view, the bet highlighted a growing set of divides: The academic divide between ecoologists and economists on matters of the environment, the philosophical divide between growthers and zero-growthers, and the political divide between the left and the right over matters of economic management. Sabin does an intriguing job of couching the bet within the heated political environment of the 1970's and 80's tracing the environmental movement through the national political scene from the environmental conservatism of Nixon, to the limited growth/strict conservation advocacy of Carter (not much mention of Ford), to the deregulated free-marketism of Reagan. In the end Sabin draws lessons from both Ehrlich and Simon to make a strong and lucid case for a middle ground between the coercive population reduction arguments of Ehrlich and the free-market environmentalism of Simon.
On a personal note, I found the book particularly useful at providing a different perspective on my own training in environmental economics. Beginning my graduate training in 1991, the year after the bet ended, the foundations of market-based environmental interventions had already been accepted by most economists and much of the mainstream public (to varying degrees of course). "The Bet" provides an interesting, easy-to-read introduction to the muddy politics and social setting that served as a backdrop for the development and relevance of the field of environmental economics. The political and public context provided by "The Bet" has helped to provide me with a much better understanding of how I ended up thinking like I do about environmental issues.
From John, via Newmark's Door, via Slate comes this intriguing story of the real origins of Maryland Blue Crabs:
Lots of local [Maryland] diners have a taste for blue crab. Lots of chefs and restaurateurs have good crab-based recipes. Lots of home cooks enjoy hosting crab-related events and have their own preferred methods of crab preparation. Over time, as the region's population has grown, this local crab economy's ferocious demand for crab has outstripped the local ecosystem's [Chesapeake Bay] sustainable level of crabbing. So the market demands that crabs [from Louisianna] be shipped not to crabless parts of America but to America's crab-production heartland [Maryland]—the place where the secondary and tertiary elements of the crab economy are in place, and the finished product has maximum value.
Increased demand causes increases in quantity supplied. When the local economy can no longer supple the quantity demanded, non-local producers will increase the quantity supplied (because the relative willingness to pay is higher).
The editors of Marine Resource Economics are pleased to announce the recipients of the 2011 Hong Award for Outstanding Article in MRE. Established by Dr. Seoung-Yong Hong, President, Inha University, Incheon, Korea, this award is given annually to recognize outstanding works published in MRE.
Zinnia Mukherjee and Kathleen Segerson, Turtle Excluder Device Regulation and Shrimp Harvest: The Role of Behavioral and Market Responses, MRE Vol. 26(3):173-189
Selection is made annually by the associate editors of Marine Resource Economics. Only articles that have been published in Marine Resource Economics are eligible for consideration. The award consists of a monetary prize and recognition on a perpetual plaque housed in the Department of Environmental & Natural Resource Economics at the University of Rhode Island.
Federal authorities on Wednesday announced that about 1,900 square miles of Atlantic Ocean waters are open for building offshore wind farms, making North Carolina the nation’s new energy hotspot for planting forests of whirling turbines in the high seas.
The U.S. Department of Interior identified a combined sector that’s larger than any such previously designated for hosting the 400-foot turbines. Two of the maritime blocks are between Myrtle Beach and Wilmington, while one lies beyond the Outer Banks, across from Kitty Hawk, Nags Head and Manteo.
A host of developers are expected to express interest, setting the stage for a federal lease auction as early as next year to allow projects to move forward. North Carolina’s ocean waters are considered to have some of the best wind resources along the East Coast. What’s more, the offshore areas picked by the feds have the advantage of being near populated regions with existing transmission capacity and other infrastructure needed to move gigawatts of electricity onto the power grid.
But offshore wind energy remains among the most expensive forms of electricity today, and building a wind farm in the sea has proven an elusive goal in this country. The industry is still distrusted by some as a subsidy-dependent boondoggle, even though advocates depict wind energy as a clean and safe alternative to mining, fracking, energy imports and nuclear waste.
An offshore wind farm long planned in Nantucket Sound off Cape Cod in Massachusetts is tied up in legal challenges, while plans to build one in Delaware waters fell through in recent weeks because of the likely expiration of federal tax incentives for these multibillion dollar projects. ...
One company that expects to file a notice of interest in bidding for leases is Arcadia Offshore, the New Jersey company whose Delaware deal collapsed for lack of subsidies. Arcadia president Peter Mandelstam ...
... acknowledged that with historically low natural gas prices, no utility is likely to buy offshore wind power unless it’s required to do so by state regulators or lawmakers. The argument for investing in wind power is that it’s an emissions-free source of electricity with a fixed price, as opposed to wagering on natural gas, which could spike in price and strand consumers with soaring bills, he said.
You can say a lot of things about me, and people do, but one thing people can never say is that I missed an opportunity to suggest you look at some of my research.
*It has been a long time since we titled a post "A mighty wind" and I almost did it this time, but doesn't the thought of wind turbines in North Carolina send chills down your spine? No? What, are you some sort of hobgoblin?
For seven decades, Pemex, Mexico’s state-owned oil monopoly and a mainstay of the government’s revenue, regulated itself — which is a polite way of saying it could do pretty much as it pleased.
The Mexican government relies on Pemex oil revenue from wells like these in Veracruz for as much as 40 percent of its budget.
No authority challenged the wisdom of investments like the billions it has spent here in the Chicontepec oil field to extract just a trickle of petroleum even as private companies have pulled torrents from similar shale rock in Texas and North Dakota.
The company’s safety procedures went largely unscrutinized as it joined the oil majors drilling in deepwater areas of the Gulf of Mexico. And the company faced no serious consequences for not keeping its promises to raise output or operate more efficiently.
But in the last few years, that has begun to change. The tiny National Hydrocarbons Commission, created by the Mexican Congress in 2008 to increase regulatory oversight of the company, is proving to be a surprisingly sharp thorn in Pemex’s side.
The five-member panel of energy specialists, which has a staff of 61 and an annual budget of about $7 million, has begun to confront the company’s executives over where and how they drill for oil. With a raft of new regulations and its own blunt assessments of the practicality of Pemex’s projects, the commission is pushing the company to explain its plans.
Pemex does not have to follow the regulators’ recommendations, but the commission’s young president, Juan Carlos Zepeda, is speaking out when it does not.
“The strength of the commission is in public opinion,” said Mr. Zepeda, 42, an economist who contends that Pemex, officially Petróleos Mexicanos, should be more transparent as it spends $20 billion this year to find and pump oil. “The force of change will come from Congress, from opinion leaders, from national universities, from society.”
... In the last few weeks, Pemex and the chief of its production and exploration subsidiary, Carlos Morales Gil, have begun responding to the pressure. The company officially reduced its estimate for probable reserves in Chicontepec by about 30 percent, to 6.49 billion barrels of oil equivalent, ending two years of wrangling with Mr. Zepeda’s team.
Then, at the end of March, Pemex announced that it had signed a contract with Wild Well Control, a Houston company that handles oil well disasters, including the 2010 BP spill, to provide deepwater containment systems, and it is in talks with a consortium of gulf oil companies to provide additional services. Pemex is also analyzing whether it should buy additional insurance for the deepwater wells, Mr. Morales said.
A bipartisan group of senators floated legislation Thursday that would funnel billions of dollars in fines from last year’s oil spill to Gulf Coast states.
The legislation mandates that 80 percent of Clean Water Act penalties eventually imposed on BP or other companies deemed responsible for the spill go to five Gulf states. Under current law, penalty money goes to the federal Treasury. ...
In total, 35 percent of the penalty money is evenly split among the five Gulf coast states under the legislation. Thirty percent goes to a Gulf Coast Ecosystem Restoration Council and another 30 percent is divvied up among states based on those most heavily affected by the spill. The remaining 5 percent will be allocated equally for Gulf science and fisheries programs.
BP and the other companies deemed responsible for the spill face billions of dollars in penalties. If BP is deemed negligent under the Clean Water Act by the courts, the company will have to pay $1,000 for every barrel of oil spilled into the Gulf. If the courts find that BP was grossly negligent, the company will have to pay $4,200 per barrel.
Last year's spill spewed about 4.9 million barrels of oil into the Gulf, meaning BP could have to fork over between $5.4 billion and $21.1 billion.
"This blog aims to look at more of the microeconomic ideas that can be used toward environmental ends. Bringing to bear a large quantity of external sources and articles, this blog presents a clear vision of what economic environmentalism can be."
... the Environmental Economics blog ... is now the default homepage on my browser (but then again, I guess I am a wonk -- a word I learned on the E.E. blog). That is a very nice service to the profession. -- Anonymous
"... I try and read the blog everyday and have pointed it out to other faculty who have their students read it for class. It is truly one of the best things in the blogosphere." -- Anonymous