Environmental Economics

Command and Control with Flexibility

Economists are not real big fans of command and control pollution regulations--you know the kind where the regulatory agency says here is how much pollution is allowed and here is how you are going to do it.  The reason?  Because there are usually cheaper ways to meet the same goals.  Requiring everyone to do the same thing means that no one has the flexibilty to figure out the cheapest way to meet the goal on their own.  The only way a command and control regulation is efficient (least cost) is if the required method of reduction is the least cost method for all polluters.   But since it is unlikely that the regulatory agency can possibly know the least cost reduction technology for all polluters, it's unlikely that command and control regulation are the cheapest.

That's why the EPA has built in some flexibility for states to meet Clean Air Act ground level ozone--smog--standards.

Some benefits of beach nourishment

In the "weekly update" of Region Focus, the quarterly magazine of the Federal Reserve Bank of Richmond, Betty Joyce Nash writes about beach nourishment (Sand Dollars):

Those who benefit the most from the replenishment of Virginia Beach's sandy shores aren't the ones who pay the most.

Thanks from Env-Econ

I have an unstated (I guess it's stated now) goal of increasing readership month to month.  So far so good (see the graph on the right).  Thanks everyone and keep reading.  We'll try to keep writing things interesting enough to read*--or at least stupid enough to keep your attention. 

If you're enjoying the site, pass it along to friends..we're extending our offer of free membership in the Env-Econ club.

*John, I didn't have much interesting to say today so I thought I would suck up to the readers.

Red Snapper transferable IFQs

Get ready for the look and feel of more efficient fisheries management. From NOAA's Fishnews:

NOAA Fisheries has published a final rule to implement Amendment 26 to the Fishery Management Plan for Reef Fish of the Gulf of Mexico. Amendment 26 establishes an individual fishing quota (IFQ) program for the commercial red snapper sector of the reef fish fishery in the Gulf of Mexico . Initial participants in the IFQ program will receive percentage shares of the commercial quota of red snapper based on specified historical landings criteria. The percentage shares of the commercial quota will equate to annual IFQ allocations. Both shares and IFQ allocations will be transferable. The intended effect of this rule is to manage the commercial red snapper sector of the reef fish fishery to preserve its long-term economic viability and to achieve optimum yield from the fishery.

Emphasis added: (1) transferability enhances the efficiency of individual quotas [the website for the quota trades will be http://ifq.sero.nmfs.noaa.gov. Check it out sometime in 2007], (2) optimum yield refers to the maximization of economic rent (i.e., profit) from the fishery. This is, typically, a more conservative managment plan than the biologist preferred maximum sustainable yield (which maximizes revenues, ignoring cost).

Neo-Malthusian

In an opinion piece in the New York Times is the current case for limits to economic growth: increasing energy scarcity and climate change.

It's like shooting fish in an artificial barrel

We talk a lot here about unintended consequences of what people do, or what policy makers decide (we like to call the unintended consequences 'externalities' to make us sound smart).  Most of the time these unintended consequences are negatives--or costs:  like pollution.  But sometimes, a policy might actually create unintended benefits.  Here's an example: 

"There was a natural free-flowing warm water stream here that had populations of native sport fish such as smallmouth bass," said Paul Balkenbush, a fisheries supervisor with the Oklahoma Department of Wildlife Conservation.

But the construction of a dam nearby in 1968 put [a stop] to that as the water released into the river from the artificial depths of the dam was much colder than normal.

[...]

So in 1989 Oklahoma wildlife authorities decided to replenish the depleted fishery with species that thrive in cold water conditions: rainbow and brown trout.

A fictional account of new source review

I'm at the beach house as the SEA conference is winding down last week and realize that I didn't bring a thing to read. One of the 5 late '80s vintage UK economists hands me White Thunder (a native American four corners Navajo reservation whodunnit). I've never read these but I've always loved paperback mysteries. I begin reading at my usual paragraph by -- chase down the 2 year old -- paragraph pace, enjoying the time away from the Environmental Economics blog and, on page 95, it happens:

Ella glanced out the side window, staring at the haze that ran along the river, hating the pollution that the coal-fired power plants brought to the Rez. The newer plants kept their smokestacks clean using the latest technology, but one plant in particular had been built prior to 1970, and wasn't subject to the same EPA standards. It was under a grandfather clause that made it exempt from new requirements. To add insult to injury, much of the power it provided was sold out of state. But the damage it did remained here.

Peter King on global warming

From Monday Morning Quarterback's 10 things I think I think:

10. I think these are my non-football thoughts of the week:

...

b. No global warming, huh? Why will we be able to go tanning outside today in New Jersey? And why, on the last day of the 11th month of the year, will it be 66 degrees outside?

Here is what the local weather guy says about temps in northwestern NC:

Record high temperatures were set Sunday in Boone (68, breaking the old record of 67 set in 1985) and tied in Banner Elk (69, tying a record set in 1973). West Jefferson was close (70, just short of the record high of 72 set in 1973). Here we go again today, 70 this afternoon in Boone breaks the old record.

We get back to a non-global warming norm Saturday: "A few clouds; Seasonably cool; High in the mid 40s; Low in the upper 20s."

TIME on risk

Time Magazine has an interesting (and lengthy) story this week on how humans perceive and react to risks.  The main point is that humans are really bad at assessing risks and often put too much focus on unlikely events and too little focus on likely event. 

Shadowed by peril as we are, you would think we'd get pretty good at distinguishing the risks likeliest to do us in from the ones that are statistical long shots. But you would be wrong. We agonize over avian flu, which to date has killed precisely no one in the U.S., but have to be cajoled into getting vaccinated for the common flu, which contributes to the deaths of 36,000 Americans each year. We wring our hands over the mad cow pathogen that might be (but almost certainly isn't) in our hamburger and worry far less about the cholesterol that contributes to the heart disease that kills 700,000 of us annually.

Here's a few passages I found interesting--or at least somewhat relevant for posting:

Southern Economic Association: Epilogue

I attended the SEA meetings last weekend. Here, for your listening pleasure, are my top 10 odds and ends and other semi-random thought-provoking thoughts.