Environmental Economics

Table of Contents for Marine Resource Economics 28(1)

Don't miss that last book review!

Content of Marine Resource Economics Volume 28 No. 1 March 2013

Sharing a Migrating Fish Stock, Rögnvaldur Hannesson

Remuneration Systems and Economic Performance: Theory and Vietnamese Small-scale Purse Seine Fisheries, Pham Thi Thanh Thuy, Ola Flaaten, and Nguyen Thi Kim Anh

The Impact of Technical and Non-technical Measures of Water Qualityon Coastal Waterfront Property Values in South Florida, Okmyung Bin and Jeffrey Czajkowski

To Have One’s Cake and Eat it Too—Managing the Alien Invasive Red King Crab, Jannike Falk-Petersen and Claire W. Armstrong

Fisheries Management under Irreversible Investment: Does Stochasticity Matter? Diwakar Poudel, Leif K. Sandal, Sturla F. Kvamsdal, and Stein I. Steinshamn

Books Reviewed

Resource Economics: An Economic Approach to Natural Resourceand Environmental Policy, Third Edition by John C. Bergstrom and Alan Randall, Reviewed by Göran Bostedt

Contingent Valuation: A Comprehensive Bibliography and History, by Richard T. Carson, Reviewed by John C. Whitehead

Congratulations to Zinnia Mukherjee and Kathleen Segerson who receive the 2011 Dr. S.-Y. Hong Award for Outstanding Article in Marine Resource Economics Volume 26

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

Award Selection:

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.

They're here*

Cue Carol Anne:

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.

via www.newsobserver.com

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?

An example of the dangers of an unregulated extractive monopoly

From the New York Times:

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.

"Senators unveil bill to funnel oil-spill penalty money to Gulf"

The Hill's E2-Wire:

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.

Stingray Point

Nothing happens in this video, which gives you an idea of what I did a couple of days ago ... my first sailboat ride.

 

"BP to Pay $1 Billion for Gulf Restoration"

I burned one of my freebies on this one, I should at least get a blog post out of it:

BP will provide $1 billion for early oil spill restoration efforts in the Gulf of Mexico in a voluntary agreement with the federal government and five states, company and government officials announced on Thursday.

The agreement, the largest of its kind in an oil pollution case, does not absolve BP of legal liability for the explosion and spill that occurred April 20, 2010, or from the costs of any additional economic and environmental damages. The company faces fines and penalties of as much as $21 billion as a result of the disaster, the worst offshore drilling accident in United States history. The company could face additional penalties under a Justice Department criminal and civil investigation.

The advance payment, to be divided among the states and the two lead federal agencies overseeing restoration efforts, will be used to rebuild coastal marshes, replenish damaged beaches, conserve ocean habitat and restore barrier islands.

The $1 billion does not represent the governments’ estimate of the ultimate environmental cost of the explosion and spill, which poured nearly five million barrels of oil into the gulf over 87 days last year. Federal and state officials are conducting a review known as a natural resource damage assessment to measure the injury to the gulf habitat and devise a plan for restoring it, a process that generally takes years. Any restoration efforts financed by the $1 billion will count toward the company’s final liability, officials said.

via www.nytimes.com

The economics publishing process takes so long that I had to reread this article to figure out what it is about...and I'm the lead author

A brief insight into the pressing relevance of John's and my research:

"Effects of information about invasive species on risk perception and seafood demand by gender and race,"

Timothy C. Haab, Department of Agricultural, Environmental and Development Economics, The Ohio State University, Columbus, OH 43210

John C. Whitehead, Department of Economics, Appalachian State University, Boone, NC 28608

George R. Parsons, Department of Economics, University of Delaware, Newark, DE 19716

Jammie Price, Department of Sociology and Social Work, Appalachian State University, Boone, NC 28608, United States

Article history:
Received 28 January, 2008
In print Resource and Energy Economics, Volume 32: 586-599, November 2010

2 years, 9 months from submission to publication.  Hopefully we weren't saying anything timely.

 

No trees were harmed in the production of this research

From the inbox:

Dear Dr. Haab,

The final corrections to your proof have been made. Further corrections cannot be made. Your article is now published online at:

http://dx.doi.org/10.1016/j.reseneeco.2010.04.008

Details:

Title: Effects of information about invasive species on risk perception and seafood demand by gender and race

Authors:Timothy C. Haab, John C. Whitehead, George R. Parsons and Jammie Price

Abstract: In this paper we consider the effects of negative and positive risk information on perceived seafood risks and seafood consumption by gender and race. The data is from a Mid-Atlantic survey of coastal seafood consumers. We elicit risk perceptions in three risk scenarios with a dichotomous choice with a follow-up question format. We elicit continuous revealed and stated preference seafood consumption in nine risk and price scenarios. Analysis in four gender and race categories indicates that demographic groups respond to the positive and negative information in different ways. Communication of risk information as risk mitigation policy is a challenge.

via www.sciencedirect.com

The $20 billion fund doesn't cover damages?

Wow (States weigh big claims against BP):

Gulf Coast states are gearing up to follow shrimpers and hotel owners in seeking payouts from BP PLC for lost revenue and other damages stemming from the Gulf of Mexico oil spill.

The demands could far exceed the $305 million BP has already given the states of Louisiana, Mississippi, Alabama and Florida to help pay cleanup costs, promote tourism and begin building sand berms off the coast of Louisiana, state officials say. Lawyers advising the states said they would eventually seek multi-billion dollar payouts, but it was still too early to give a tally.

BP declined to comment on the states' legal strategies. The British oil company agreed nearly two weeks ago to honor claims for damages and lost business revenue from individuals and businesses through a $20 billion, independent compensation fund administered by Kenneth Feinberg, the Washington, D.C.,-based lawyer and arbitration expert.

The fund is also meant to cover payments for states and localities to defray cleanup costs, but not necessarily claims for the larger economic damages that Florida and the other states plan to present directly to BP, the state's representatives said.

My initial impression was that the $20 billion would cover economic damages over and above cleanup costs. If the $20 billion is for cleanup costs and the states are going after more over and above that (no surprise, I guess), the final bill could be mind-blowing.

... Mississippi Attorney General Jim Hood has sought advice from state university researchers, economists and lawyers to assess the environmental and economic damage the spill has caused to the state.

I bet it is a real feeding frenzy at the Gulf coast land grant schools.