Environmental Economics

New design

We don't feel pretty anymore with the gray banner and green background so we're playing around with new designs. Please bear with us as we experiment off and on (previews don't cut it).

This canned design is called "Hills green" or something like that. It is the most "environmental" of the designs but maybe over the top? Comments welcome.

Price controls in China

From the WSJ Afternoon Report:

China will raise the prices of gasoline, diesel oil and aviation kerosene by 500 yuan ($67) per ton, or roughly 10%, starting from Nov. 1, as regional shortages of fuel spread and even reached Beijing. "The adjustment was made to shorten the gap between high-flying international crude prices and domestic oil prices," the National Development and Reform Commission said in announcing the move.

Wildfires, Global Warming and Congress

From The Select Committee on Energy Independence and Global Warming:

Following the devastating fires in Southern California, the Select Committee on Energy Independence and Global Warming will hold a hearing examining the scientific link between a changing climate and the frequency and intensity of wildfires.

Witnesses will discuss the present effects of climate change on wildfires and contributing factors such as increased drought, changes in snowmelt patterns, changes in precipitation, and higher temperatures.  In addition, mitigation and adaptation strategies will be discussed.

The frequency and intensity of wildfires have increased in recent decades throughout the Western United States.  Last year, the Forest Service spent a record $2.5 billion fighting wildfires that burned a record 9.9 million acres (4 million hectares), compared to the ten-year average of 6 million acres.  This year 8.7 million acres have burned thus far. The current fires burning in California are expected to cause over $1 billion in property damage alone and have already burned an area the size of Rhode Island.  Mounting scientific evidence indicates that the growth in wildfires is linked to global warming and that this trend is likely to intensify in the coming decades. 

Deadweight loss on Halloween

Econ 101: Taxes placed on otherwise well-functioning markets create deadweight loss.  In layman terms, this means that taxes cause the size of the economic pie to shrink.  How much the pie shrinks depends on how much producers and consumers respond to price changes.  Well, the economic pumpkin pie in Iowa just shrunk a little:

The Iowa Department of Revenue, often accused of trying to squeeze blood out of turnips, is now searching for pennies in pumpkins.

A new department policy this year has made Halloween jack-o'-lanterns subject to the state sales tax, and many Iowa pumpkin growers are feeling tricked.

How much effort should journal referees expend?

From the RePEc blog (Easing the life of referees):

One of the more boring tasks a referee faces is to check the algebra of a submission that looks promising. This is often trivial to do but may be quite time consuming, and it requires concentration. Given programs like Mathematica, the task can be simplified by asking authors to give their calculations in machine readable code. This would render it easier to do such boring checks and would, at the same time, help authors to avoid mistakes.

Mathematica is, however, too expensive. Is there any freeware that could be used for such purposes? If so, RePEc could recommend using it as a standard. This would ease the refereeing process. Referees could concentrate on contents rather than being immersed in ultimately trivial calculations. Such a program must of course be able to do symbolic calculations, like forming derivatives or evaluating symbolic equation systems.

Why are referees of theoretical papers expected to check the algebra? Referees of empirical papers are not expected to check the statistics. Otherwise, we'd be given the data.

Warsh on Dasgupta's primer

From Economics for Adults:

The primer I have enjoyed most, the one I would recommend to a friend who wanted to learn how economists think about the world right now, is one that passed almost completely unnoticed into the stream, perhaps because it is so slight. But then, that is the point of Economics: A Very Short Introduction, by Partha Dasgupta, the Frank Ramsey Professor of Economics at Cambridge University.  He boils down everything that's ordinarily included in a thousand-page introductory text, and more, to 160 graceful but undersized pages.

...

It's good that people are reading economics primers, good too that a genre now exists apart from those lugubrious (but necessary) texts. Yet economics is so obviously incomplete,           even in its own terms, as a way of understanding the world, that the less cocksure are its expositors in their pronouncements, the better. I wish more people would read Dasgupta's book, and I wish that more economists would write variations on its theme. It is a model specimen.

Car repairs and the value of the environment

Yesterday I had the misfortune of taking the family minivan to the shop to get the brakes checked.  Turns out the anti-lock brake module is bad and needs to be replaced.  The bill?  $1130.  Now the minivan is 8 years old and has almost 90,000 miles on it.  So we asked ourselves the obvious question:  Is it worth $1130 to repair the van.  After careful cost/benefit analysis, we decided, yes, the value of repairing the van is at least that much, to us. 

Now I know you're asking what the hell does this have to do with the environment.  Read on for another in our long line of unprovoked attacks on ecological economics...

Quand la mer monte

Anyone care to translate?

Quatre universités caroliniennes, alliées au Postdam Institut for Climat Impact, en Allemagne, ont étudié l’impact financier d’une montée plausible du niveau de la mer dans la moitié sud de l’Etat. L’hypothèse d’une hausse de 30 cm a été retenue, contre 90 cm possibles d’ici à 2100 selon le Giec (Groupe d’experts intergouvernemental sur l’évolution du climat). Les chercheurs ont chiffré à près de 4 milliards de dollars la perte pour le tourisme, le commerce et l’immobilier. Dans la zone étudiée, plus de 5 000 km² sont situés à 90 cm maximum au-dessus de la mer. «Même une augmentation relativement faible aurait un impact très loin dans les terres», confirme le professeur John Whitehead, de Appalachian State University, coauteur de l’étude publiée début juin (2).

Source: http://www.liberation.fr/transversales/futur/288147.FR.php.

Willingness to Pay for Amateur Sport and Recreation Programs

Here is the abstract from a new paper co-authored by a very famous sports economist:

A contingent valuation method (CVM) survey in Alberta, Canada, allows estimation of the household willingness to pay (WTP) for enhancements in the province’s extensive sport and recreation programs. The estimated annual WTP of $18 per household for small enhancements in the programs far exceeds the estimated WTP of households in the United States to avoid the loss of major league sports teams, as determined in previous CVM studies. Those opposed to gambling, which helps to fund the Alberta programs, are more likely to favor using income taxes to finance expansions.

Carbon tax vs cap-and-trade in California

Check out The Economist's Voice for a summary of carbon cap-and-trade in California (note the alliteration):

California's Bold New Climate Policy
Lawrence H. Goulder, Stanford University

Summary: Lawrence Goulder describes California's recent commitments addressing Global Climate Change and recommends that a cap-and-trade program play a key role in achieving the state's climate policy goals.

Footnote 1:

It may be noted that a Weitzman-type analysis, which can indicate whether a price or quantity instrument is likely to lead to smaller policy errors ex post, does not indicate the relative appeal of a carbon tax or cap-and-trade in the present context. The reason is that the total allowable quantity is already given by AB32. The relevant issue is achieving that quantity with maximal cost-effectiveness, not introducing the policy that has the smallest expected value of efficiency losses due to deviations from the optimal quantity.