Environmental Economics

Richard Lindzen: Climate skeptic or Conspiracy theorist?

Last week, I had the distinct pleasure of spending almost three hours with world renowned climate skeptic Dr. Richard Lindzen.  Dr. Lindzen is charming, intelligent, and incredibly interesting.  He could just as easily teach history as meteorology at MIT – the man is a fountain of knowledge.  He is, in fact, so intelligent and knowlegable that he can be very intimidating.  He gave an hour long talk to a group of primarily non-scientists (myself included) and in the end most people were afraid to ask questions.  Well, I guess I don’t have the same fear of public humiliation – so I decided to ask some questions.  Before I divulge with the fireworks, let me back up a little.

The greenies might have a point this time

New Hampshire is mandating a cut in mercury emissions at its power plant -- 80 percent by 2013. Any reduction beyond 80 percent can be used to bank against future SO2 emissions (acid rain, smog). The greenies are mad:

[Doug] Bogen [of Clean Water Action] said this is the first state in the country to allow credits from one pollutant to be traded for reductions of another.

“Certainly this is a bad precedent. We are giving them back the credits we took away from them four years ago,” Bogen said.

I don't really blame them this time. I've never heard of banking one pollutant for another. But then, I don't know everything.

Could it be that mercury stays in-state and SO2 bothers Maine but not New Hampshire? Just wondering. Live free or die!

What should we do with pollution tax revenues?

The comments on John's post yesterday on the double-dividend of pollution taxes raise an important question in pollution tax design:  What should we do with the revenues generated by the pollution tax? 

The double dividend

When there is more than the optimal amount of pollution and a big old nasty budget deficit, pollution taxes are a nice policy option. The double-the-pleasure, double-the-fun usefulness of this policy is known as the double dividend. The World Resources Institute has undertaken a "green fees" project to identify where pollution taxes can be successfully implemented:

The Green Fees initiative is identifying and analyzing a portfolio of tax reforms that would be both fiscally prudent and environmentally sound. WRI is educating policymakers and opinion leaders in order to build support for these measures.

It's worth a look if you are interesting in this sort of thing.

Ohio is "Forward Thinking"

Ohio is looking to become the next Detroit...in the good sense. 

The state’s push to invest in emerging fuel-cell technology is paying off: Several major corporations such as Rolls-Royce PLC are working with Ohio businesses on fuel-cell efforts.

Ozone Man in the 21st Century

I voted for Al Gore, though not very enthusiastically.  So it was with some apprehension that I attended a preview of the new movie, An Inconvenient Truth, which opened in LA and NY on May 24 and elsewhere in the coming weeks.  The film can be described as a long lecture by the Ozone Man on one of his favorite topics - global warming.  I was ready for disappointment but something remarkable happened.

Is it summer yet?

And can I take a freakin' vacation? Travellers prepare for Memorial Day Holiday:

Calvin Walker of Winston-Salem has no intention of letting high gasoline prices interfere with his vacation plans this Memorial Day weekend.

Me neither, I'm putting 1500+ miles on the van this week. Don't hate the player, hate the game.

Motorists will find the average price of regular unleaded gasoline at $2.78 a gallon this weekend in North Carolina, the highest level for a Memorial Day holiday, according to AAA Carolinas.

Coase at work...or maybe not

In principle, the Coase theorem makes sense...when property rights are well-defined, two parties should be able to negotiate a mutually beneficial, economically efficient solution to a land use dispute.  But in practice, bargaining over land use can be messy.  Consider the case of 14 acres of privately owned vegetated land in an industrial area southeast of L.A.  The owner wants to build a warehouse.  Darryl Hannah (Splash) and other do-gooders don't want him to.  Seems like a perfect set-up for Coasian bargaining, right?

Krugman on macro impacts of global warming policy

From A Test of Our Character ($):

There's some dispute among economists over how forcefully we should act to curb greenhouse gases, but there's broad consensus that even a very strong program to reduce emissions would have only modest effects on economic growth. At worst, G.D.P. growth might be, say, one-tenth or two-tenths of a percentage point lower over the next 20 years. And while some industries would lose jobs, others would gain.

Is this true? I've always thought that a "very strong program" would have economic growth implications larger than 0.2%. The reputable estimates of macro impacts from Kyoto were larger than that, up to 0.5% of GDP. Maybe new technology has trimmed the cost estimates? Still, 0.2% of a $12 trillion economy is a $24 billion cost.

My go to benefit estimate of Kyoto is $20 billion so the net benefits aren't so negative with Krugman's cost estimate. And, $20 billion is at the low end of the range of estimates. And, with scientific consensus, I'm ready to re-evaluate my use of the very lowest benefit estimate out there.

Dirtbag climber

People tell me that I live in the "bouldering capital of the South." But a fear of heights keeps me from scaling anything vertical. But the sport is interesting. One reason is that climbers have a serious internal tug of war with wanting to climb anything that looks fun/beautiful and wanting to avoid risking damage to it (e.g., anchoring). Here is a recent example (Park Service Bans Climbing of Utah Arches):

Climber Dean Potter scaled Delicate Arch, the soaring desert symbol of southern Utah. Now, the National Park Service wants to make sure he doesn't do it again.

Arches National Park on Tuesday announced a tightening of its rules on climbing after Potter announced with photographs and video that he made an unassisted climb of the arch just after daybreak Sunday.

Arches Park Superintendent Laura Joss said she reported Potter's climb to the Interior Department's chief lawyers, and park rangers were investigating whether Potter did any damage to the arch.