Environmental Economics

More dam economics

Another reason to hate Duke (SC Board denies Duke hydro permit):

Regulators in South Carolina refused today to grant Duke Energy a water-quality certification the utility needs to renew its hydroelectric license for the Catawba River. ...

Two environmental groups, the S.C. Coastal Conservation League and American Rivers, had challenged the S.C. certification. They said it would have allowed Duke to release too little water from its dams for aquatic creatures, including the endangered shortnose sturgeon. ...

Duke has worked to renew its Catawba license, first granted in 1958, for several years. License renewal would allow Duke to continue managing the river and 11 Catawba reservoirs for up to 50 more years.

A comment on the unfair burden of green-space-unadjusted stormwater fees

From the Charlotte Observer (Owners seek credit for Green Space):

Mecklenburg Storm Water Services has proposed increasing the fee for most homeowners next fiscal year and shifting more of the burden to the largest homes. The smallest homes would see a slight decrease.

Charlotte homeowners with more than 5,000 square feet of impervious surfaces would see their annual fee increase from about $96 to more than $200. ...

City Councilman Michael Barnes said he has received e-mails from constituents concerned that the lawns and trees they take care of wouldn't be factored into the new equation. “Bigger homes are typically on bigger lots with lawns,” he said. “There should be some accounting for that.”

Charlotte and county officials say they don't take the green spaces into account because it would take too long and too much money to tabulate and keep up with over time.

“It's been talked about, but technology-wise, we're not there yet. It might happen in the future, but it's not happening today,” said Joe Hecksher, business manager for Charlotte Storm Water Services.

He said homeowners who build retaining ponds or rain gardens or take other measures to capture significant amounts of rain can apply for credits. But just having a big lawn or a couple rain barrels probably wouldn't cut it, he said.

If you can gather data on square feet of impervious surfaces, how much harder would it be to divide by lot size? On the other hand, how much adjustment in annual fees are likely due to changes in lot size. Reducing the annual fee from $200 to $180 doesn't seem like that big of a deal (especially considering bigger homes are often owned by richer people and the marginal utility of $1 falls with income [in theory]).

In case you were wondering why I didn't flame your comment last Thursday ...

... I was at the World Bank presenting this (preliminary, i.e., not ready for prime time) paper:

Joint Estimation of Revealed and Stated Preference Averting Behavior: An Application to Improved Municipal Water Supply in Kathmandu, Nepal

by Subhrendu K. Pattanayak and John C. Whitehead

Abstract. In this paper we demonstrate an approach to combining and jointly estimating revealed and stated preference data for drinking water quality and improved water supply. The application is to piped-water services in Kathmandu, Nepal. The revealed preference model uses averting behavior method data on the decision of whether to treat water. The stated preference model uses contingent valuation method data on the decision of whether to hook up to an improved water system. The bivariate probit model is used to jointly estimate the determinants of the decisions. We test for common coefficients across the revealed preference and stated preference data and find evidence that parameters related to the willingness to pay for health risk reductions are statistically equal while other coefficients vary. Households are willing to pay $3/month (US$) to reduce health risks. Averting behavior data suggests that water treatment generates an additional $3/month in joint production benefits (e.g., improved taste). The willingness to pay for the reduction in health risks, joint production and improved water supply is $18/month.

Feel free to download the paper (PDF) and/or presentation (PDF) while supplies last.

"What are you doing?"

For Earth Day, one of my favorite artists, Wyland* ** ***, is taking on a 2.8 acre mural of earth on the top of the Long Beach Sports Arena:

By sunset tonight, Wyland hopes to complete his 2.8-acre mural of the Earth on the arena's rooftop. On Tuesday, he finished a renovation of his 1992 whale and marine life mural, "Planet Ocean," on the arena's exterior walls and got permission from the city to paint the roof while in town.

Using spray guns and rollers, Wyland painted the white roof in earth tones as an Earth Day tribute. He named the work, "Earth: The Blue Planet."

"Art can change the world," he said, "especially on a grand scale."

*His art is among my favorite, not necessarily him personally.  He's a little pompous and self-indulgent (I say as I hide from my reflection in the mirror).  But name me an artist who isn't.  That doesn't make his art any less cool.

**Wyland is probably most famous for his 'Whaling Wall' murals in most major cities.  If you've seen a massive marine life mural on the side of a city building, it's probably Wyland.

***The picture to the right is Water Planet.Wyland was commissioned by the National Oceanic and Atmospheric Administration--in celebration of their 200th anniversary--"to create a work of art paying homage to our ocean and atmosphere."

Green jobs in Boone, NC

From GoBlueRidge.net:

The North Carolina Commerce Department has granted the Town of Boone a $600,000 grant for its water system.

 ...

According to [Representative Cullie] Tarleton, the grant money will be used to remove sediment from the Winkler’s Creek raw water intake pool.

The project is also expected to improve water quality when the main raw water intake is shut down because of low flow in the New River.

According to Boone Mayor Loretta Clawson, removing sediment from Winkler’s Creek should take around 30 months.

Using Romer-Bernstein method's mulitiplier of 1.5, the $600 thousand grant will generate $900 thousand in GDP. This is about 0.0000% of GDP in a $14 trillion economy. Using the Romer-Bernstein Rule, each 1% of GDP generates 1 million jobs, the Boone water grant will generate about 6 new jobs.

Oh. And water quality benefits. There will be some water quality benefits.

Sarc.

My best post of 2008

I left a comment on a green jobs post the day after pagan celebration of a Christian holy day:

That is why economics is known as the dismal science. We strange economists are most adept at recognizing the opportunity costs of various decisions. No one else really seems to care if opportunity costs offset some, or all, of the benefits of a good idea.

Opportunity cost is a strange notion to some (especially intro micro students) ... it is the value of the next best alternative whenever a choice is made. For example, if I purchase a $1000 flat panel LCD TV, the true cost of the TV is not $1000, but what I could purchase instead (such as $500 in each kid's college education 529 plan [sorry kids]).

In the case of green energy subsidies, if you are an economist then you must at least wonder if this is the best way to spend the money. There are benefits of pushing down the costs of green energy (e.g., improved air quality), and there are opportunity costs. Ignoring the opportunity costs is likely to lead to wasteful spending. Considering the opportunity costs is likely to lead to better social decision making -- regardless of whether the benefits of the subsidies exceed the costs.

The notion of opportunity cost, its recognition and the inevitable result that not all great sounding ideas are really great ideas, is the most important thing that economists bring to many policy discussions. Pointing out the unpleasantantries of opportunity cost is one of the purposes of this blog. The dismal part of the dismal science can not be avoided.

Save the Bay. Again?

Growing up in the region, I know first hand the futility of past efforts--mostly non-enforceable voluntary incentives--to clean the Chesapeake Bay (Save the Blue Crabs dammit!).  Is it time to start over?  Some think so...

A group of scientists who study the Chesapeake Bay took on a new role -- environmental activism -- yesterday, when they made an unusual appeal to revamp the bay's government-led cleanup effort.

That effort began 25 years ago today, with an agreement signed by three governors, the mayor of Washington and the administrator of the U.S. Environmental Protection Agency. Now, the program has spent nearly $6 billion but has failed to deliver the healthy estuary that was promised.

Yesterday, the scientists joined with environmentalists and former Maryland officials to call for a major change. They said the current effort -- which relies largely on encouraging voluntary measures, such as reimbursing farmers or septic tank owners who reduce pollution -- should be scrapped.

In its place, they proposed using tougher regulations to force the bay's polluters to clean up.

...and some don't...

Yesterday, officials in the Maryland and Virginia governments said they would consider the ideas, as did U.S. Sen. Barbara A. Mikulski (D-Md.), who has been active on bay issues.

Jeffrey L. Lape, head of the EPA's bay program, spoke at yesterday's news conference, promising the scientists and activists that he would work to improve the cleanup.

Later, EPA spokesman Travis Loop said it would be counterproductive to scrap the bay program and start over. "It would kind of take the regional restoration effort back to square one, and that's not what's needed at this point," he said.

Hat tip:  Lonewolf

OSM's EIS

I have a soft spot in my heart for the Office of Surface Mining since it was the sponsor of my first funded research project. But I've been able to see past that history to wonder what is going on here. Allowing coal mine waste to be dumped near mountain streams? Rats:

The Interior Department has advanced a proposal that would ease restrictions on dumping mountaintop mining waste near rivers and streams, modifying protections that have been in place, though often circumvented, for a quarter-century.

The department’s Office of Surface Mining issued a final environmental analysis Friday on the proposed rule change, which has been under consideration for four years. It has been a priority of the surface mining industry.

It sets the stage for a final regulation, one of the last major environmental initiatives of the Bush administration, after 30 days of additional public comment and interagency review.

The proposed rule would rewrite a regulation enacted in 1983 that bars mining companies from dumping huge waste piles, known as “valley fills,” within 100 feet of any intermittent or perennial stream if the disposal affects water quality or quantity.

The revisions would require mining companies to minimize the debris they dump as much as possible, but would also let them skirt the 100-foot protective buffer requirement if compliance is determined to be impossible.

...

Mining companies remove mountaintop areas to expose the coal. Tons of rocks, debris and other waste are trucked away and dumped into valley areas.

The bottom line from the Environmental Impact Statement (see below) appears to be there are no economic effects and the environmental effects are mostly positive. So, why are environmentalists upset and the coal industry is happy?

“The new rule will allow coal companies to dump massive waste piles directly into streams, permanently burying them,” warned Joan Mulhern of Earthjustice, an environmental group that has fought the practice.

...

“We’re relieved,” said Jason Bostic of the West Virginia Coal Association, “that the rule clearly enunciates Congressional intent that valley fill construction and coal refuse construction can take place in intermittent and perennial streams.”

Hello Krutilla (1967)

Conservation reconsidered in southeastern NC:

The U.S. Fish and Wildlife Service wants Titan America to look elsewhere for its cement plant and stone quarry because the site in Castle Hayne is so ecologically unique it may be irreplaceable.

...

In written comments to the Army Corps of Engineers, the wildlife service said the forested wetlands along the Northeast Cape Fear River and Island Creek are home to a diverse roster of animal and plant species, an important nursery area for fish and a refuge for migratory birds.

Emphasis added to the Krutilla-ish key words: unique and irreplaceable.

New Env-Econ Feature: Create your own joke

John and I are always getting getting grief for making inappropriate jokes about semi-serious issues.  Now it's your turn.  An offical spouse of Env-Econ called me on my way in to work this morning with a tip toward the following story.  She thought it was ripe for a good joke but couldn't think of one.  I assured that Env-Econ readers would come through.  So don't let me down.  Submit your joke in the comment section.  We might even send the author of the best comment an official Env-Econ Drive Less! bumper sticker.

Crews are working this week to clean up 5,000 gallons of olive oil that leaked from a holding tank into [Baltimore's] Inner Harbor....The incident is posing a problem to wildlife above and below the water line.

"We have low oxygen levels to begin with, because we have so much nutrient pollution which comes from fertilizers and sewage," said Eliza Smith Steinmeier, a Baltimore Harbor waterkeeper. "And that sucks the oxygen out of the water, and we end up with fish kills."

Alan Williams of [the Maryland Department of the Environment ] said the olive oil isn't toxic for water birds like ducks and gulls, but that oil on their feathers takes their insulation away. One male duck got caught up in the mess and is said to be doing well, according to the MDE.