The Department of Agricultural, Environmental, and Development Economics (my department) in the College of Food, Agricultural and Environmental Sciences (my college) at The Ohio State University (my university) is hiring for four new faculty positions--and I am not ashamed of taking advantage of this blog to promote the positions. If you have (or are close to earning) a PhD with interests in agricultural economics, environmental economics, regional economics, development economics or some combination of those fields along with other interests, then we can probably align your interests with one of our four positions.
Assistant or Associate Professor in Global Economic Modeling: a tenure-track assistant/associate professor position in the area of global economic modeling and integrated assessment. Economic modeling approaches of particular interest include dynamic optimization and computable general equilibrium modeling, as well as familiarity with approaches for handling decision making under uncertainty. Individuals with experience integrating economic models with physical/biological models are encouraged to apply.
Assistant Professor in Agribusiness: a tenure-track assistant professor with teaching and research responsibilities in agribusiness. Applicants with interests in agricultural markets and marketing, finance, supply and demand analysis, industrial organization, international trade or agricultural and food policy, that complement a primary interest in agribusiness are encouraged to apply.
Assistant or Associate Professor in Sustainable Development and Economy: an assistant/associate professor, tenure-track position to develop an internationally recognized program of research and teaching focused on sustainable development and the trade-offs among economic development, social equity and environmental protection in international or regional contexts. Areas of interest include, but are not limited to: economic growth; equity; resource use; technological change; socio-ecological systems; sustainable and resilient communities.
Click on the links for full descriptions and application info.
Last week I mentioned I mentioned that I would be presenting (yesterday) to The Ohio State University Environmental Professionals Network Breakfast Club on the topic of "Ohio's Water Resources and Citizens at Risk - Ag-related Practices and Policies to Prevent Harmful Algal Blooms, Post-Toledo." I (along with each of two other panel members) was given 5 minutes to give opening remarks before moderator driven Q&A. Rather than my normal rambling unstructured style of presentation, I decided to give a speech--which means actually writing a speech. So here is the speech I gave (speech I read is probably a better way of putting it) to a audience of 230 representatives of ag and non ag sectors. I'm told there will be video at some point. I will let you know if video emerges--provided it doesn't make me look like a complete bungling idiot.
We’ve heard a lot today about solutions for high phosphorous loads in Lake Erie and the resulting harmful algal blooms. As an environmental economist, I’m told my role in this discussion is to provide a balanced look at the potential costs of reducing phosphorous loadings into Lake Erie, the benefits of those reductions to society, and the burden of the costs of phosphorous reductions.
Some of you may be wondering, what is an environmental economist? An environmental economist is an economist who applies the science of economics to environmental issues. I am not an environmentalist. Don’t get me wrong, I care about the environment. But I am realistic about the role that incentives, trade-offs, and profits play in finding solutions to environmental issues that lead to sustainable human well-being. I recognize the reality that the economy and the natural environment are inextricably linked and attempting to separate the study of each creates a situation in which neither is sustainable. Economic, social and environmental sustainability requires the realization that no single solution exists.
So what then, from my perspective as an environmental economist, is the fundamental issue surrounding harmful algal blooms? Excess nutrient loads into Lake Erie are the result of misalignment of incentives. The profit incentives of the on-farm sector fail to fully capture the costs of nutrient application decisions to the non-agricultural sectors. The cost-savings incentives of industrial and municipal sources of run-off fail to fully capture the downstream costs of urban run-off. The consume-now incentive of today’s consumers fails to fully capture the cost of today’s decisions on future generations.
None of these statements are judgments on the intent of individual farmers, or municipal decision makers or society today in making decisions that impose excess costs on others. In fact, in my experience, most people want to do the right thing. Farmers care about environmental issues. Municipalities care about water quality. Today’s generation cares about the future. Yet when consumption and production decisions are made, reality differs from intent.
For example, when I drove here this morning, I gave no thought to the cost my car exhaust imposes on others. I know that my exhaust contributes to increased atmospheric pollution. I know that by driving I increase the likelihood of health issues for those with breathing issues. I know that my driving contributes to long-term climate change. Yet, other than being a genuinely nice person, I have no incentive to incorporate those external costs into my driving decisions. The price of driving does not fully reflect the external costs.
Prices are the economy’s rationing mechanism. It is prices that drive economic decisions. Prices provide signals. It’s prices that serve as a market’s way of reflecting the value of something. And if prices fail to fully reflect the current and future costs and benefits of production and consumption, markets will misallocate society’s scarce resources.
In political and social discussions we hear a lot of talk about the need for less government regulation, the need for free markets. In general I agree with free market advocates. But in order for a market to do its job of allocating society’s scarce resources today and into the future, that market must capture ALL costs and benefits. Otherwise a market is not truly a free market.
In the case of the environment, we can think of the problem as one of the failure of markets to properly price the services the environment supplies. In effect, the environment is treated as a free input in production and consumption. It is only natural that if something is free we will use more than we would if it were priced at its true value. If gas were free, I would use a lot more of it.
Because the cost of environmental degradation is not captured in markets, we use more of it than we would otherwise. It might be tempting then to conclude that markets are the problem. I agree to a certain extent. Markets are failing to properly account for costs and benefits. But markets are also the solution.
To solve the harmful algal bloom problem, we need to find ways to better capture the external costs of using nitrogen and phosphorous in the markets in which they are used—and then allow the resulting incentives to work to solve the problem. To do so, we can focus on the quantity of phosphorous, or we can focus on the price. Quantity restrictions are effective if monitored effectively, but effective monitoring is difficult. Effective quantity restrictions will reflect in market prices. However, ill-designed quantity restrictions can result in regulatory costs that are higher than needed.
Regulating prices, on the other hand, allow the users to make decisions that reduce their own costs. By allowing the freedom to choose how to adapt to higher prices, price-based policies can achieve the same outcomes as quantity restrictions at lower cost. Prices also provide incentives for innovation. As prices rise to reflect the full costs, users will have the incentive to find lower cost alternatives. New investments in research and development will lead to new lower-cost technologies. Market-based price regulations allow the market to allocate society’s scarce resources efficiently.
However, many price-based solutions have a negative reputation. As I mention each of these, I’m sure each will garner some sort of negative reaction: taxes, subsidies, cap and trade, user fees. But as an environmental economist, I recognize that solutions that build environmental costs into market decisions allow individuals to make the decisions that are in their own best interest. The result is what’s best for society.
Unfortunately, we are talking about a problem of magnitude that hoping people will do the right thing is not an option. While voluntary programs are attractive politically, achieving a 40% reduction in Lake Erie phosphorous loadings, if that is indeed the goal, is going to require more than reliance on goodwill. Real, sustainable, solutions are going to require a recognition that prices need to capture the full social costs of nitrogen and phosphorous use. Anything short of that will lead right back here in the future, hoping the problem solves itself.
A UN-backed conference on climate change ended with a call to end capitalism. The conference, organised by the Venezuelan government, saw 130 green activist groups meet to discuss their demands.
Green website Respond to Climate Change says that at the end of the conference, the groups issued what is being called the 'Margarita Declaration', which says: "The structural causes of climate change are linked to the current capitalist hegemonic system. To combat climate change it is necessary to change the system."
This declaration will be handed to environment ministers when they meet in the UN’s talks in Lima later this year.
Participants at the meeting included the World Wildlife Fund (WWF), Climate Action Network International, Third World Network and Christian Aid.
The declaration also condemned the idea of having a so-called "Green Economy", saying this was nowhere near radical enough, and only the end of the capitalist system would solve the problem of climate change.
Look, I get the point. Markets set prices. Prices ration goods. Because environmental goods and services are severely underpriced by markets (in many cases that price is zero), environmental goods and services are overconsumed, underproduced, overexploited, crapped on, however you want to say it. Environmentalists are rightly concerned.
Because environmental goods and services are mispriced in a market based system, market based systems must be to blame for environmental degradation and (here's where the logic breaks down) therefore, we must abandon market based systems for allocating goods and services.
But to paraphrase Winston Churchill, capitalism is the worst system for allocating environmental goods and services, except for the rest. I'm always stunned by the misunderstanding and misrepresentation of market systems by environmentalists. Markets ration scarce goods. They do so through prices. The problem with environmental degradation is not that markets lead to overexploitation of environmental goods and services, but rather market conditions fail to allow markets to establish the proper price for environmental goods and services. If the price is right, people will (usually) make rational decisions.
So, the solution to environmental issues is not to abandon markets and dictate to people the choices they should make, but rather the solution is to establish the correct set of prices that capture the full scarcity value of all goods and services, including environmental goods and services. In some cases this might happen through the establishment of markets for environmental goods and services (for example, cap and trade) or it might happen through direct pricing of environmental goods and services (for example, emissions taxes), or it might happen through restrictions on use (for example, endangered species laws).
Abandoning markets will not solve environmental problems, because the environment will still be viewed as free. Prices, or some other representation of value, are still needed, and there is simply no better way to establish prices than through markets.
Poorly functioning markets might lead to environmental problems, but well-functioning markets are the best solution.
The Lone Star state may be warning Elon Musk “Don’t mess with Texas” thanks to its newest Tesla (NASDAQ:TSLA) sales ban, but Musk doesn’t exactly seem to be running scared. In fact, his company just recently erected a new Supercharger station right on Texas grounds, conveniently halfway between Austin and San Antonio and behind the San Marcos Outlet Mall.
YNN reports that the Supercharger is the first of its kind in Texas, marking just one more benchmark in Tesla’s ultimate goal of constructing charging stations that span the nation’s roads and thus allowing Model S drivers to make coast-to-coast road-trip plans without having to worry about an uncharged sedan.
As of now, there are 18 Superchargers across the country, clustered mostly on both the West and East Coast. But this new charging station, smack-dab in the heart of Texas, proves that more and more Superchargers will soon make an appearance, whether U.S. states agree with Musk’s selling techniques or not.
Musk has his eye on Texas because the Lone Star state was the first of its kind to ban sales of the Model S within its borders. Texas lawmakers don’t like that Musk has removed the middlemen in the car-buying experience; the electric vehicle maker instead sells it product directly to consumers.
From the inbox (From Neil Drobny, Director of Environment, Economy, Development and Sustainability at Ohio State):
of the project teams in my Energy & Sustainability class last spring was
challenged by Alcoa to come up with a new idea for building awareness and
changing behavior that would increase the recycling rate of aluminum cans stuck
at 60% for many years to a level of 75%. They came up with the idea of a
reality TV show around the life and work of “canners” who scavenge aluminum
cans for a living. They made an 11-minute video to convey the idea. The
team entered the video in an annual, nationwide student film contest sponsored
by the Professional Recyclers Organization of Penna. Last week they found
out they placed second. The video is on YouTube where it has had over 200 views
since being posted last week: http://www.youtube.com/watch?v=KB4c72VHkZw.
Whodathunk that shirtless college students generate so much economic opportunity?
The honey bees are dying—and we don’t really know why. That’s the conclusion of a massive Department of Agriculture report that came out late last week on colony collapse disorder (CCD), the catch-all term for the large-scale deaths of honey bee groups throughout the U.S. And given how important honey bees are to the food that we eat—bees help pollinate crops that are worth more than $200 billion a year—the fact that they are dying in large numbers, and we can’t say why, is very, very worrying.
The problem is that there doesn’t seem to be a single smoking gun behind CCD. The USDA report points at a range of possible causes, including:
A parasitic mite called Varroa destructor that has often been found in decimated colonies.
A bacterial disease called European foulbrood that is increasingly being detected in U.S. bee colonies
The use of pesticides, including neonicotinoids, a neuro-active chemical
As Brad Plumer pointed out over at the Washington Post, it’s not that the E.U. necessarily has more evidence about the role that the chemicals might be playing in CCD. This is a classic case of policymaking by the precautionary principle. The pesticides are considered guilty until proven innocent, and so they’re preventively banned, even before the scientific case is rock solid. That’s not unusual for European environmental regulation, especially in regards to chemicals. In the U.S.it’s the reverse—before the federal government is likely to take the step of banning a class of pesticides, and pissing off the multi-billion dollar chemical industry, you’re likely to see a lot more science done.
So what we may get in Europe and the U.S. is a de facto field test of the real impact of neonicotinoids on CCD. In two years, if American bees are still dying and their European cousins are thriving, we might just have our answers. And if not, well, I hope you don’t like cashews, beets, broccoli, cabbage, brussels sprouts, chestnuts, watermelons, cucumber, fennel, strawberries, macadamia, mangoes, apricots, almonds or any of the other dozens of food crops pollinated by our hard-working, six-legged, unpaid farm workers.
While the Ohio State men’s basketball team was competing in the NCAA Tournament, other members of the university community were working toward a different championship title.
OSU was crowned the winner of the second annual Environmental March Madness Tournament early Tuesday, defeating other schools in the “Sustainable 16” after filing out initial surveys.
The tournament pitted universities against one another based on each college’s environmental curriculum and sustainability efforts and was organized by Enviance, an environmental software company.
As the 2013 national champion, OSU will be awarded a $5,000 grant for its Environment, Economy, Development and Sustainability (EEDS) program. Its director will also get an all-expense paid trip to San Diego to attend the 2013 Enviance User Conference and be a part of a discussion panel in April.
EEDS is a joint major/partnership between 'my' department (Agricultural, Environment and Development Economics) and our School of Environment and Natural Resources with other partners around campus like the Business School. Visit eeds.osu.edu for more information.
"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."
Don't believe what they're saying
And allow me a quick moment to gush: ... The env-econ.net blog was more or less a lifeline in that period of my life, as it was one of the few ways I stayed plugged into the env. econ scene. -- Anonymous
... 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