Environmental Economics

Raleigh mayor proposes water use incentives

In response to several env-econ.net posts, well, not really in response, but a self-absorbed blogger would think so, the Raleigh mayor proposes economic incentives:

Raleigh Mayor Charles Meeker is asking for a review of the city's rules on water use, including a new system that would vary rates depending on how much water a household consumes.

...

With variable rates, the city would charge a single rate for a base amount of water and a higher rate for consumption beyond the base level. Variable rates have cut water usage in other communities, Meeker said.

A western RGGI

From Reuters, an announcement of a new regional greenhouse gas initiative, complete with cap-and-trade (ahem: a second best policy, relative to a carbon tax, but better than command and control):

Western U.S. states and Canadian provinces on Wednesday agreed to cut greenhouse emissions 15 percent by 2020 in the latest regional pact to regulate the gases ...

The group of six Western states and two provinces also agreed to design a market-based mechanism, such as a cap-and-trade program, by the end of August 2008 to help reach the goal.

Hat tip: Daily Grist.

Who offsets?

Tom Arnold--chief environmental officer at TerraPass, not Roseanne's ex-husband--sent me a link to the results of a survey TerraPass just completed asking:  What does the TerraPass clientele look like?  (please keep all hippie/Birkenstock jokes to yourself).  In other words, are TerraPass' carbon offsetters greenies who also participate in other environmentally friendly activities or big-honkin SUV drivers using offsets to assuage their guilt?  The results--it looks like the greenies win.

Water policy: command and control with fines

Four days ago I suggested that water bans don't have much effect on water use (Watering Restrictions Begin Today in Mecklenburg):

Mecklenburg County today will enforce its first mandatory water restrictions in five years as searing heat, little rainfall and high demand steadily empty reservoirs.

The Mecklenburg restrictions will apply in Charlotte and throughout the county. They limit lawn watering to twice a week, based on addresses, and ban residential car washing and refilling of pools and ornamental ponds. Fines start at $100.

...

Mandatory reductions in Mecklenburg in 2002 cut water demand by 22 percent and netted 1,985 fines.

The goal now is to lower demand by 10 percent. Restrictions are expected for at least 30 days. They could get tougher -- once-a-week or no lawn watering -- if conditions deteriorate.

Correction: when command and control policies are combined with economic incentives, e.g., fines, and effective monitoring and enforcement, the outcome can mimic a policy based solely on economic incentives. However, economic incentive policies are still more cost-effective. In this case if the price of water rose with increased household usage, and there were further price increases during a drought, cities would probably avoid resorting to temporary water bans based on whether your street number is even or odd.

The temporal pattern of cost estimates

From the Long Island wind farm cancellation story:

.... a consultant’s study ... estimates the project’s cost at $811 million, making wind power more than twice as expensive as that from conventional sources.

The original estimate for the windmills was about $200 million. The price increased to $356 million when FPL Energy of Florida won the bid for the project in 2003. Then last year, rising costs nearly doubled the estimate to $700 million.

Is this the correct rule of thumb for cost estimates? When a project is first proposed multiply the cost by a factor of four.

What's your walkscore?

The Oil Drum points to this site--www.walkscore.com--that claims to:

...help homebuyers, renters, and real estate agents find houses and apartments in great neighborhoods. Walk Score shows you a map of what's nearby and calculates a Walk Score for any property. Buying a house in a walkable neighborhood is good for your health and good for the environment.

Cool, but one small problem.

What I'm listening to this morning

Title: Jahamericana
Artist: JShogren
Webpage: http://www.myspace.com/jshogren

Quick Review: I like it.

And, yes, it is the same guy (the King Carl XVI Gustaf's Professor of Environmental Sciences for 2007-08): http://uwacadweb.uwyo.edu/Shogren/. Now you know why your Resource and Energy Economics editorial decision has been taking so long! (... that last one is a joke, I've only heard good REE turnaround stories).

Quote of the Day--On efficiency vs equity

The inherent vice of capitalism is the unequal sharing of the blessings. The inherent blessing of socialism is the equal sharing of misery.

Winston Churchill

Exactly.

If a species goes extinct and no one knows, does it matter?

In Friday's post, I questioned whether $27 million was a justified expenditure for preserving the habitat of the ivory-billed woodpecker--a species whose existence is in question and there have only been two 'possible' sightings in three years.  In the comment section an interesting philosophical debate over species extinction arose.  Since only a few people read the comments and for some reason 25% of our readers take Fridays off, I thought I would ask the question here and see what you thought:

Should all species extinctions be prevented?

Read below for some of my views and some from readers.

Fixing the hazard insurance market

"Howard Kunreuther, co-director of the Risk Management and Decision Processes Center and a professor at the Wharton School of the University of Pennsylvania" considers Who Will Pay for the Next Hurricane? in the NYTimes on Saturday:

.... a much broader problem: how this country can reduce future losses from natural disasters and aid victims in their recovery efforts. Because of increasing development in hazard-prone areas and the effects of climate change, we are in a new era of catastrophic losses from natural disasters. Ten of the 20 most costly natural disasters have occurred during the past five years — all 10 of them hurricanes, typhoons or tropical storms.