Environmental Economics

Cap-and-trade with a safety valve

Shelia Olmstead and Robert Stavins are in favor of carbon cap-and-trade with a safety value. Check out their The Economist's Voice article "A Meaningful Second Commitment Period for the Kyoto Protocol":

Robert Stavins and Sheila Olmstead propose ways to modify the Kyoto Protocol for its second commitment period (2012-2016) so that it will provide a way forward that is scientifically sound, economically rational, and politically pragmatic.

In addition to C&T-SV they suggest:

• "Broad participation by major industrialized nations and key developing countries ..."
• "emissions targets ... ought to begin at [business as usual] levels, then depart gradually ..."

In sum, include the U.S., China and India, start slow and use incentive-based economic policy. I like it.

Recreation Benefits of U.S. Parks

$55 billion annually according to Pamela Kaval (whom I'd never heard of ;->) in her recent working paper. Here is the abstract:

Over 90 percent of people living in the United States participate in some type of outdoor recreation, from walking the dog to rock climbing. These activities increase a person’s well-being and are examples of recreation benefits. These benefits can be measured by using a variety of available techniques to calculate consumer surplus values. Consumer surplus values for recreation in U.S. parks were collated from an extensive literature review. Studies conducted between 1967 and 2003 yielded over 1,200 observations of non-market benefits. From this meta-analysis, it was determined that an average day of recreation in U.S. parks provide people with a non-market benefit of $60.50/day (2006 US$). With an estimated 924 million visitor days, the benefit of outdoor recreation on federal park lands during 2006 was estimated at $54.7 billion dollars. This analysis did not include state, county, and city parks, and hence the total benefit of outdoor recreation in all U.S. parks would be significantly higher.

We used to work with this guy?

From the Wall Street Journal's Real Time Economics blog--courtesy of John who can't seem to figure out WiFi in the Edmonton airport--here's a story backhandedly making fun of John and my former colleague at East Carolina University:

Hot off the National Bureau of Economic Research electronic presses: Frat boys drink more.

Or, more precisely, being a member of a fraternity — even after adjusting statistically for the fact that drinking guys are more likely to join a frat — has “a large impact on drinking intensity, frequency and regency, as well as various negative drinking consequences that potentially carry negative externalities.” So writes Jeffrey S. DeSimone (B.A., Swarthmore College, 1991; Ph.D., Yale University, 1998), now teaching at University of Texas at Arlington.

This just in: Academics are paid way too much money to spend way too much time coming to obvious conclusions.

National Petroleum Council calls for U.S. Carbon Policy

From the International Herald Tribune:

It started with a simple question by Samuel Bodman, the energy secretary: "What does the future hold for oil and natural gas supply?"

The query was made in October 2005 in a one-page letter sent to Lee Raymond, the former chairman of Exxon Mobil and head of the National Petroleum Council, a federal advisory group representing the oil industry.

After nearly two years, Raymond has finally delivered his answer. The result is a colossal 476-page study entitled "Facing the Hard Truths About Energy" that involved 350 participants, suggestions from over 1,000 people, submissions by 19 foreign governments from Australia to Saudi Arabia, and dozens of subcommittees.

The report, which was made public in Washington on Wednesday, was billed as one of the most comprehensive analysis of the global energy challenge.

In answering Bodman's question, it also provides a sobering picture of the energy problem facing the United States and the world. Most strikingly, some of the recommendations adopted by the petroleum council also probably far exceed what Bodman had in mind, or what the Bush administration is prepared to endorse.

[...]

"It is a hard truth that policies aimed at curbing carbon emissions will alter the energy mix, increase energy-related costs and require reductions in demand growth," the report said. It said the U.S. government should establish a regulatory framework for managing carbon emissions, but did not recommend any specific policy.

Do surveys towards gas prices reveal actual behavior?

John and I have spent a lot of time trying to understand the relationship between what people say they are going to do and what they actually do.  In fact, we're currently working on (with our friend Ju-Chin Huang) a highly anticipated and sure to be best-seller book on ways to combine what we in the know call stated and revealed preference data--yes that whole sentence is sarcastic except the part about us working on a book--and actually John is doing most of the work, I'm just taking credit like usual. 

Anyway, one problem we have in understanding the relationship between what people say they will do and what they actually do is that there is usually a very long time gap between the two.  For example, if I ask you how many more recreation trips you will take to your favorite lake if water quality improved by 20%, you can take a guess, but we won't be able to measure the accuracy of that guess for years because the improvement may take a long time.  So we're always on the look out for stated preference surveys that can be tested by watching what people actually do, in a relatively short period of time.  This might be just such a chance.

Help public radio crunch the sustainability numbers

From the inbox, an email from Marketplace (I'm thinking "Marketplace! My fav" ... what's the yield on the 10 year T-note?):

Every day we report on the financial markets, but we'd also like to do the same thing with sustainability -- by looking at the numbers.   We're interested in hearing how people would quantify the connection between sustainability, the economy and consumerism.

Here are a couple of examples we've dug up so far: the Happy Planet Index reports that people in Vanuatu are the most happy.... the number of apple species in the U.S. has dropped by 97% since the late 1800s... the growing acreage dedicated to shopping malls and landfills.  You can be creative or serious.  We want to hear all your ideas.

We've set up an online form where you can share your thoughts: http://americanpublicmedia.org/pin/sustainabilitynumbers_query/

Here is my suggestion:

Gasoline prices - When gasoline prices are high, households will begin to think about how to reduce their driving. Two big decisions, living closer to work and buying smaller cars, would go a long way towards making the U.S. economy more sustainable.

And, I ain't kidding around. That's the best number I can think of.

LAP dance: get your copy now

From NOAA's Fishnews:

NOAA Fisheries has posted a pre-publication copy of a Technical Memorandum on the design and use of limited access privilege programs. This document was developed by NOAA Fisheries' Office of Policy utilizing a small steering committee comprised of NOAA, Council and other personnel with expertise or experience with limited access privilege (LAP) programs. The result is non-regulatory guidance on the technical design and use of LAP approaches, all in the context of the Magnuson-Stevens Reauthorization Act of 2006. This non-binding technical information evaluates the relative pros and cons of various LAP approaches and discusses options available to address general questions about the future use of LAPs given past domestic and international experiences.

The pre-publication draft will be posted online [until the middle of August] prior to submitting it for printing.

Downloads are available while supplies last.

Note: Limited access privilege program is the secret code word for individual (transferable) quotas (couldn't anyone see the "lap dance" jokes coming? At the SAFMC meetings in June, I wasn't even the first one who said it [i.e., yes, there is someone out there who is more immature than I]). Market-based fisheries management is back baby!

Beach closed to fishing due to piping plover chicks

From the Virginian(-Pilot):

A beach on Oregon Inlet, one of the most popular destinations in the Cape Hatteras National Seashore for off-road vehicles, has been closed to protect piping plover hatchlings, the National Park Service announced.

The restricted area begins about 1.2 miles south of Ramp 4 and extends 0.9 miles south and west around the southern end of the Bodie Island spit near the Herbert C. Bonner Bridge, according to a news release. To compensate, the Park Service opened an additional half-mile of seashore north of Ramp 4 and south of Coquina Beach to off-road vehicles.

A total of 3.4 miles of beach north of Oregon Inlet remains open to off-road traffic via Ramp 4, located just north of the bridge off N.C. 12.

"We recognize there is a strong desire for recreational access in this location, particularly at this time of year," Superintendent Mike Murray said in the statement.

The temporary closure, which also prohibits pedestrians, is expected to be lifted after the chicks fledge, typically 25 to 35 days after hatching.

Oregon Inlet is almost as popular for shore fishing as The Point at Cape Hatteras. I hereby declare that the cost of closing this beach to fishing is $200,000.*

*Note: Here is the analysis from a beach closure last summer. Please ignore the mis-spellings. I'm guessing that the Oregon Inlet shore fishing is worth about 5/7 of The Point shore fishing. And I'm an expert.

The value of sleep

Decision time: Monday 8:30 am flight out of Greensboro, 1:45 from Boone. Do I drive at night and get 7 hours of sleep or do I get up early on Monday morning for the drive and get 5 hours sleep (don't ask me to go to bed early ... what am I? a 5 year old?). The first option requires a night in the Motel 6 at about $46:

I choose the evening drive: 2 extra hours of sleep at a cost of about $46. According to the notion of revealed preference I value an hour of sleep by at least $23.

Note: this morning I had 15 minutes to check my email. In the coffee shop next to the hotel I couldn't tap into WiFi. The coffee shop WiFi costs $9.95. The business center at the hotel has free WiFi but it's around the corner and would require repacking my laptop bag. I'm tempted to pull out my credit card but ... what am I? crazy? ... I go without email. According to the notion of revealed preference, I don't value my email THAT much!

A 20,000% Tax Increase?

Following up on John's post yesterday on cigarette taxes in North Carolina, here's a story on a new proposed federal tax on cigars--raising the current tax from $.05 to as much as $10 per cigar.

As part of an increase in tobacco taxes designed to pay for children's health insurance, the nickel-per-cigar tax that has ruled the industry could rise to as much as $10 per cigar.

Best quote of the story:

"Things happen strangely in Washington..."

Here, here.