Environmental Economics

Is this a Benefit or Cost of Warming?

This graphic appeared in yesterday's Columbus Dispatch.  It is an update of the USDA plant-hardiness map originally published in 1990.  The National Arbor Day Foundation* has updated the growing zones for 2006 based on recent temperature trends.  After you look at the graphic, stop back and let me know whether this represents a cost or a benefit.

*It wasn't until I was in high school that I figured out there was a difference between Arbor Day and Labor Day.  Did I just say that out loud?

US Climate Action Partnership

The announcement is scheduled for today:

Ten major companies with operations across the economy — utilities, manufacturing, petroleum, chemicals and financial services — have banded together with leading environmental groups to call for a firm nationwide limit on carbon dioxide emissions that would lead to reductions of 10 to 30 percent over the next 15 years.

Introduction of this group, which includes industry giants like General Electric, DuPont and Alcoa, is aimed at adding to the recent impetus for Congressional action on emissions controls and the creation of a market in which allowances to emit carbon dioxide could be traded in a way that achieves the greatest reduction at the lowest cost.

Ho-hum cap and trade?

Mr. Sterba and the leaders of the other environmental groups, which also includes Frances Beinecke of the Natural Resources Defense Council and Eileen Claussen of the Pew Center on Global Climate Change, said that an efficient, flexible cap-and-trade system would stimulate the development of new technologies to cut energy use and provide renewable energy.

Pigou Club

Check out the Pigou Club blog at http://www.pigouclub.com.

The Author of the Writing on the Wall

In yesterday's posts** on ExxonMobil's new position on climate change policy, I claimed that one possible reason for the change in postions (or at least the change in language) is they see the proverbial writing on the wall.  What with the election results, they know climate policy is coming, so why not be involved in the conversation rather than be the target of the conversation.  Well, today we know the author of the writing on the wall.

House Speaker Nancy Pelosi sought to create a special committee Thursday in an effort to jump-start long-delayed government efforts to deal with global warming and produce a bill by Independence Day.

[...]

The committee will be led by Rep. Ed Markey, D-Mass., who shares Pelosi's goals, said a Democratic leadership aide, speaking on condition of anonymity because Pelosi had yet to announce her choice.

Actual bill-drafting duties will be left to committees that have a say in the matter. That could be several because global climate change could affect virtually everything.

Pelosi's move increases the likelihood that Democrats will propose far tougher constraints on greenhouse gas pollution than the Bush administration wants.

I know many will view this as a good move (as do I to an extent), but I get the uneasy feeling that the House is starting to swing their big 'Tax Hammer' and right now, everything looks like a nail.

**And if you don't think this is an attempt to get more people to read my posts from yesterday (here and here and here), you're fooling yourself.  Those three posts (here and here and here) took a long time to write, dammit.  Did I mention you can find the posts here and here and here?

Drive Less?

From the WSJ Morning Brief:

New data from the International Energy Agency showed that oil consumption by the 30 members of the Organization for Economic Cooperation and Development, which together use about 60% of the world's daily oil supply, fell 0.6% in 2006. Companies are already being hit by falling oil prices, which have been sliding since last July, after topping $77. And prices were at $50.68 in electronic trading on the New York Mercantile Exchange midday today in Asia, according to the Associated Press. While many analysts expect oil prices to climb back up to the $60 a barrel range this year, others expect lower prices to remain. "The bubble is bursting," Frederic Lasserre, head of commodity research at Societe Generale in Paris, tells The Wall Street Journal. The drop in consumption comes as demand for gas-guzzlers, such as sport-utility vehicles, has been declining, while interest in alternative fuels has risen, the Journal says, noting that the IEA estimates that biofuels output could rise to the equivalent of more than five million barrels of crude oil a day by 2011, or close to triple output of such fuels in 2005.

Teaching ethanol economics

I don't require my students to purchase the WSJ, it seems like a tremendous waste, stacks of WSJ's pile up, unread ... and that is just in my office. However, the WSJ online edition is a great investment, both for research and teaching. And I get the weekly review in my email inbox that helps me avoid the wasteful search for articles:

Dear John Whitehead:

This week's issue of The Weekly Review: Microeconomics features 3 articles. The highlighted topics are: Environmental Economics, Asymmetric Information, and Gambling.

This week's articles are:
1. Twisted Economics of Ethanol
2. Economists Learn to Play Matchmaker
3. The Man Who Shook Up Vegas

As the spring term kicks off, please keep in mind that http://www.professorjournal.com provides The Wall Street Journal order forms and free teaching tools for use in the classroom. Remember, students get both print and online access at our lowest rates, and you receive a one-year complimentary subscription when 10 or more students sign up.

The summary and discussion questions, prepared by James Dearden at Lehigh University, are below the fold.

Why Elections Matter

Big Time. The House just rescinded the latest fossil fuel subsidies and is going to redirect the money to conservation and alternative energy. We can debate the merits of having any subsidies at all, but this is certainly a huge win for the environment and a move towards a more rational system.

Speaking with the Enemy--Part III

This is the third of three posts on a recent conference call I took part in with the VP for Public Affairs of ExxonMobil, Ken Cohen, on Exxon's recent (apparent) change in positions on climate change policy.  Part one deals with the background on Exxon's climate policy position.  Part two lays out some of my reactions to Exxon's seemingly new position.  Part three sums up with some random observations.

Some random thoughts on Mr. Cohen's responses to others questions.

Speaking with the Enemy--Part II

This is the second of three posts on a recent conference call I took part in with the VP for Public Affairs of ExxonMobil, Ken Cohen, on Exxon's recent (apparent) change in positions on climate change policy.  Part one deals with the background on Exxon's climate policy position.  Part two lays out some of my reactions to Exxon's seemingly new position.  Part three sums up with some random observations.

Going into the call, I wondered:  Is Exxon voluntarily changing their stance on climate change policy, or do they see the writing-on-the-wall and want to use the opportunity for PR?  After the call, I'm still not sure.  One thing for sure, Exxon is unapologetic about their business.  They are proud to be the largest publicly traded company in the world and plan to remain so.  At the same time, they express a desire to be known as 'environmentally responsible.'   

Speaking with the Enemy--Part I

This is the first of three posts on a recent conference call I took part in with the VP for Public Affairs of ExxonMobil, Ken Cohen, on Exxon's recent (apparent) change in positions on climate change policy.  Part one deals with the background on Exxon's climate policy position.  Part two lays out some of my reactions to Exxon's seemingly new position.  Part three sums up with some random observations.

For years I have been brainwashed to believe that ExxonMobil represents all that is inconsistent between big business and environmental responsibility.  After all, the Exxon Valdez oil spill served to propel environmental valuation--my preferred field of research--into the mainstream of economic research.  So when representatives from APCO, a PR firm, called to ask if I would participate in a conference call with Ken Cohen, VP for Public Affairs at Exxon Mobil, on Exxon's recent softening on climate change I agreed.  Keeping in mind that I am not a journalist and that I was trying to get the gist of what everyone was saying while trying sound coherent myself, here's my thoughts on the conference call yesterday.  Keep in mind, this is not a report on the conference call, but rather my impression of what was said.