Environmental Economics

Is environmental economics getting it's day in (Supreme) court?

Breaking news of great interest to environmental economists.  Why?  Because the Exxon Valdez case is one of the first widely known cases where environmental economists were involved in determining the monetary value of damages.  Now the Supreme Court will decide if the punitive damages awarded are excessive. 

UPDATE: After posting the above this morning I decided to fact check with people who know more than me (aka anyone).  I sent a message to Ted McConnell and Alan Randall, both of whom were involved in the original Exxon Valdez natural resource damage assessment for the federal government.  Turns out that the NRDA estimates by the Feds and State of Alaska (lead by Richard Carson and Ray Kopp) were--at most--used in an initial out-of-court settlement.  The punitive damages in question by the Supreme Court are separate from the NRDA estimates.  Anyway, the Exxon Valdez oil spill is back in the news, and that's probably where I should've left it this morning...

The Supreme Court on Monday agreed to decide whether Exxon Mobil Corp. should pay $2.5 billion in punitive damages in connection with the huge Exxon Valdez oil spill that fouled more than 1,200 miles of Alaskan coastline in 1989.

Opportunity Cost Case Study

Suppose you are the Columbus City Manager.  What do you do in the following situation?

The city doesn't have enough money to remove a dam on the Olentangy River, a project that would improve the river's water quality.  But if the dam doesn't come out, the city could end up paying the state $641,000 in fines.  The U.S. Army Corps of Engineers estimates it would cost $2 million to remove the dam just north of 5th Avenue and restore the stream banks, said Rick Tilton, spokesman for the Columbus Utilities Department.

But the city has only $641,000 on hand for the project. That's money the Ohio Environmental Protection Agency charged the city in fines for sewer overflows, then deferred when the city agreed to spend it on removing the dam. The city will owe the fines if it doesn't remove the dam or come up with another project the state approves.

Do you remove the dam or pay the fine?

Rain futures

From the inbox:

Financially hedge the drought. 

See. http://nwr.centraldesktop.com/re/

America's Climate Security Act

About a year ago I posted the opinion poll in the right hand column. The question reads:

How likely do you think it will be that at least one branch of Congress will pass meaningful global warming legislation next year?

• No question about it (13%)
• Very likely, but not certain (12%)
• 50/50 (13%)
• I wouldn't put money on it (29%)
• Snowball's chance in a warming world (27%)
• Your guess is as good as mine (6%)

The percent of responses are in parentheses. Fifty-six percent of all respondents are pessimistic, but I think most of the pessimism occured in the early part of 2007. It looks like something is going to happen fairly soon.

Another update: NC Coastal Recreational Fishing License

I can't believe Mankiw turned off comments. Sometimes our commenters do the job for us:

hello NC wildlife tax HOGS,

guess what, its now oct 24. 2007- i have NOT been to the NC beaches. guess why??? im NOT going to pay this year, next year or any year that NORTH CAROLINA thinks they own the oceans!!! not only did you lose my summer vacation money, im not deer hunting in NC either. spent a wonderful week on the lake erie islands sipping wine and eating yellow lake perch, keep your NC mullets. hey esaly, go tax your mother for fishing, IM NOT PAYING ANOTHER DIME TO YOU CLOWN FISH

A Call for Selective Neutering?

"Life would be easier if we didn't have the kind of population growth rates that we have at the moment.  But to force people to stop having children would be a simplistic answer."

Achim Steiner, the executive director of the UN Environment Program

As y'all know, I'm a big fan of simplistic answers.  Population control sounds good to me.  I'll go as far as to suggest selective neutering.  I'll even volunteer to be the Grand Poobah of Population Control and annoint myself the Grand Decider of who can and can't reproduce.  If you want to reproduce, please apply to me for permission.  You must submit proof of your SAT scores, affinity for sports, hair color and preference for dogs or cats.  I will then use my own arbitrary preferences and a coin flip to assign reproductive rights.  I'm also open to bribery as it shows initiative and belief in Coasian solutions.  I'm pretty sure this would make the world a happier place...at least for me.   

And yes, I'm joking.

Quote of the day

"A lot of people are under the false illusion that green building and energy efficiency is expensive and available only to the wealthy," said Dee Eggers, an associate professor of environmental studies at UNC-Asheville and a member of the state's Legislative Commission on Global Climate Change .... "But there are lots of examples of the economic opportunities that responding to climate change is going to give us."

Update: Green building is expensive. 

Source: N&O.

The 35 MPG standard and the endgame

Just so Chris Abraham will stop emailing me*, I signed the petition at Urge Congress to Pass a Strong Clean Energy Bill! I've changed my opinion a bit, after (1) debating carbon taxes vs cap-and-trade on this blog and (2) listening to the positions of some well-respected in economists live, if a policy has benefits greater than costs, then I'm all for it. Maybe the policy is command-and-control and the costs could be lower with an incentive-based policy. Big deal. In the endgame the command-and-control might be better than nothing.

*Joking.

Rationing diesel in China

From the WSJ Morning Brief (warning: no permalink):

Authorities in China -- whose ever-growing petroleum consumption has been one of the overriding factors driving oil-price growth for at least half a decade -- are now rationing diesel fuel. Soaring oil prices are shrinking refiners' profit margins, and supplies are running short. The rationing, at state-run service stations in at least four of China's economically booming coastal provinces, is limiting truck drivers to about 20 liters -- roughly five gallons -- per visit, Reuters reports.

Another stab at the economic impacts of climate change policy

Here is another article on the potential economic impacts of climate change policy in NC. Headline: Study sees boon in climate change.

I spent a lot of time yesterday worrying about the details of the results. I overlooked one simple concept: additional jobs created by climate change policy are COSTS TRANSFERS, not benefits. Here is the short story from yesterday:

Using a simple demand and supply analysis, government regulations ... will increase the costs of production as firms switch from low cost production technologies to high cost technologies .... The increased production costs will decrease the supply of goods and services and increase prices.

The benefits and costs associated with this policy are measured as the changes in consumer surplus and producer surplus in the related markets and the non-market impacts (i.e., the effects on health, recreation, etc. that might arise from the environmental policy. Here is an example of the sort of study that measures the benefits of climate change policy.

Jobs and income are not parts of benefit-cost analysis of environmental policy for a few reasons.