Environmental Economics

More on CAFE standards at Vox Baby

The safety effects of CAFE standards are assessed by Ted Gayer guest blogging at Vox Baby. After a summary of his sophisticated analysis of CAFE and safety, we get this conclusion:

By creating an incentive to build larger light trucks, the new CAFE standards will likely not achieve their goal of protecting drivers’ safety. Aside from this, I should point out that I agree with Andrew: the pertinent regulatory issue is not the total fatalities resulting from the mix of vehicle types. A consumer can decide for herself how much to spend for a safer vehicle. What she can’t decide is how threatening a vehicle other people should buy.

I do think there was another reason for the structure of the new CAFE standards. U.S. automakers make larger light trucks than their foreign competitors, so a uniform light truck CAFE standard hurts domestic automakers. I think this gets at Andrew’s concern that CAFE standards are not transparent: here’s an example where they can be used for protectionist purposes. So I throw my hat to the politically implausible goal of scrapping CAFE and replacing with a higher gas tax.

The analysis is better than anything you'll get here, mos' def'. Except, it is a bit light on the sarcasm. Shame. 

Price caps on gas are here...again.

Not sure how I missed this one (I guess the windows in my ivory tower are getting dirty).  I'm sure more people out there know a lot more about this than I do, but apparently Hawaii has legislation in place to cap the price of gas. 

"Energy Marathon"

From the RFF Connection:

Energy has been a dominant topic of national policy debate for the past several years.  Three Congresses considered comprehensive energy legislation, culminating in the massive Energy Bill that the president signed into law on August 8. Has all this activity produced national energy policy worthy of the name?  Not quite.  But, as RFF Visiting Scholar Robert Fri outlines, four key elements of the overall shape of an emerging U.S. energy policy -- not all of them reflected in Congress's recent bill -- do seem fairly clear at this point.

NC going nuclear

From the Raleigh N&O (Utility Eyes ...):

Progress Energy said Monday that it expects to apply for a license to build a nuclear power plant, placing North Carolina at the forefront of the nation's nuclear revival.

The Raleigh-based utility notified the Nuclear Regulatory Commission last week that the company plans to pick a site for a new reactor this year. Progress Energy's top executive has said that a likely option would be to add a reactor at the Shearon Harris nuclear plant south of Raleigh.

Katrina and gas prices

There are lots of great posts at the Economics Roundtable dealing with the effects of hurricane Katrina on world oil prices (no effect), U.S. gasoline prices (they're going up) and U.S. natural gas prices (they are up). Here are a few:

• Econbrowser: Impact of Katrina
• Deinonychus antirrhopus (and Outside the Beltway): Katrina and the cost of gasoline/oil
• Calculated Risk: Katrina: Refinery Map
• Knowledge Problem: We're waiting ...

Should we have national hurricane insurance?

Over the weekend, I posted on the U.S. crop insurance program.   In that post, I struggled to figure out what I could learn about environmental policy from the crop insurance program.  As I sit here looking at the pictures coming out of Alabama, Mississippi and Louisianna I find myself asking:  Why do we have a federal crop insurance program and not a federal hurricane insurance program? 

CAFE standards and safety

From the Sunday NYTimes comes a piece on the safety effects of CAFE standards (Does Lighter ...). One argument against CAFE standards is that the car companies are able to increase fuel efficiency by making cars lighter and less safe.

Some economics of Katrina

The insurance industry has estimated that the losses from Hurricane Katrina could range from $12 to $25 billion (Costliest storm ...). According to the WSJ's evening report the number was revised downward:

Eqecat, a risk-modeling firm based in Oakland, Calif., says that early estimates suggest damage to homes, small businesses and vehicles could range from $9 billion to $16 billion, which would make it one of the costliest disasters on record. The estimates don't include possible damage to drilling platforms and other oil operations. Eqecat initially estimated damages from Katrina at up to $30 billion, but it lowered its estimates after the storm veered away from New Orleans.

That is a lot of money. The midpoint estimate, $12.5 billion, is almost 0.5% of quarterly GDP.

But some economists said that the true cost of the storm may be hard to pin down. John Norris of Morgan Asset Management in Birmingham, Ala., wrote in a research note of the insurance estimates: "That is the accounting impact, not the overall economic impact. We will probably never truly know what Katrina 'cost' us. It will cost some more than others."

An additional cost is the time and money spent by those who evacuate.

Pressure for Fuel Efficiency from an Unlikely Source

Economists would predict that higher gas prices would lead consumers to put pressure on auto manufacturers for more fuel efficient cars.  But would anyone expect pressure from the United Auto Workers?  If we think about it, the incentives are there.

Market response to NIMBY-itis

Suppose an out-of-town developer and a local enviro group clash over some local land use issue. The not in my backyard (NIMBY) problem arises. It is intractable. The business firms lose lots of money due to the delays and additional costs of satisfying the concerns of the locals.

But wait, maybe a market will form to address the problem (Industry grows ...):

"There's increasing awareness of the stupendous costs and risks associated with political delay related to NIMBYism," said Debra Stein, president of GCA Strategies, a San Francisco firm that specializes in land-use issues. "More real estate professionals are recognizing this is a serious problem, but a solvable problem."

...

So consultants help developers monitor public opinion and sell the benefits of projects using traffic, demographic and economic impact studies.

Ahhhh, the smell of an economic impact study! We love those things around here (sarc level three).