Environmental Economics

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Oops

I just realized that my post for today ... set up before my big trip to see Kentucky get pasted by South Carolina ... was posted over at my dead blog (which I began about a month before Tim suggested we start this blog ... I'd shut it down but it is still the first blog in my Typepad account and all of our pictures are posted under the hypo bias link and I can't figure out how to change it ... [stupid Typepad!]). Anyway, here is the link to a research effort that I participated in (Benefit Transfer ...) ...

Are payments for environmental services in the President's new budget?

High school friend of Env-Econ (Chuck) asks: what are your thoughts on the farm part of this?  First an excerpt:

On agriculture, wealthy farmers would get less money from the federal government -- and none, three years down the line -- under proposals in Obama's first budget.

Obama's proposed fiscal year 2010 budget "phases out direct payments over three years to farmers with sales revenue of more than $500,000 annually," according to the list.

At present, "direct payments are made to even large producers regardless of crop prices, losses or whether the land is still under production."

But according to the list, "Large farmers are well-positioned to replace those payments with alternative sources of income from emerging markets for environmental services, such as carbon sequestration, renewable energy production, and providing clean air, clean water, and wildlife habitat."

The new proposed budget cuts the Market Access Program which provides "funding for overseas brand promotion." It cuts cotton subsidies and "proposes to eliminate the requirement for the government to pay the storage costs of cotton that is put under loan by the USDA. Cotton is the only commodity for which this assistance is provided."

My thoughts?  Jublilation. Joyous vindication.  Disciplinary pride. 

Reducing or removing inefficient farm income policies is long overdue...with the added bonus of cheaper food.  Sounds like a win-win to me.

If only we would have listened to SNL back in 2006

Establishing a Dollar Value for Missouri’s Wetlands

From the Southwick Associates winter newsletter

The Missouri Department of Natural Resources (DNR), with funding from the U.S. Environmental Protection Agency (EPA), wanted to establish a current dollar value for Missouri wetlands on a per acre basis. Every piece of wetland provides value through social and environmental benefits (such as flood control, water quality improvements and wildlife habitat) in addition to the property’s economic value. The cost of creating wetlands can be used to value what a natural wetland is worth.

In 2007 and 2008, Missouri DNR’s Water Resource Center gathered opinions of Missouri residents via focus groups and a survey posted on the State of Missouri main Web site and the DNR Web sites. The survey asked Missouri residents about their knowledge and behavior related to wetlands, willingness to pay for wetland-related services, and other socioeconomic issues.

The survey specifically asked Missouri residents how much more they were willing to pay for wetlands providing these wetland functions: water quality, floodwater storage, providing habitat for animals and plants, recreation, and erosion reduction. ...

The results from this survey will be used to help the State of Missouri acquire wetlands for conservation purposes. The results above help direct wetlands pricing efforts and will guide the state in its acquisition efforts, should funds be available. For a copy of the report, visit www.southwickassociates.com/freereports/default.aspx.

Is Cap and Trade in the President's New Budget?

From Green Inc (the NYTimes environmental/energy/business blog):

President Barack Obama is about to unveil his budget proposal, as my colleagues Jackie Calmes and Robert Pear report today. For environmentalists and the energy industry, perhaps the most notable feature is that the 2012 projections include revenues from a source that does not yet exist: a carbon dioxide cap-and-trade system.
...

Revenues from a national cap-and-trade system would presumably accrue when the government auctions off, to various industries, the permits to pollute.

With that, I'll pull one of my previous comments up to this post.  A simple proposal for those who want 100% auctioning of permits:

• Give away 90% in year 1. Auction 10% to lube the market.

• Give away 80% in year 2. Auction 20%.

• Continue, until we get 100% auction (8 years hence).

Gives time for evil polluters to adjust, time for the market to get going and the gov't gets its piece eventually. 

I think it could work.  

And, Mr. President, please spell my name right (Haab not Habb) when writing my scheme into the legislation.

Thanks.

$4,000,000,000,000

No matter your political views, THAT'S A BIG FREAKIN' NUMBER.

Using the latest U.S. Census Population Clock estimate (305,897,898), that's:

 $13,076.25 per person*

As John would say--Yikes!

UPDATE:  More evidence that that's a big freakin' number from the WSJ:

Even taking every taxable "dime" of everyone earning more than $75,000 in 2006 would have barely yielded enough to cover that $4 trillion.

*or $65,381 for my family.

Yikes!

The Routledge Economics 2009 New Titles Catalog arrived in the mail this week. I turned to page 35 and found this (Download Page 35):

Preference Data for Environmental Valuation
Combining Revealed and Stated Approaches

By Tim Haab, Ju-Chin Huang, John Whitehead

Price: $150.00
Add to Cart

    * ISBN: 978-0-415-77464-2
    * Binding: Hardback
    * Published by: Routledge
    * Publication Date: 14th October 2009 (Available for Pre-order)
    * Pages: 288

About the Book

The monetary valuation of environmental goods and services has evolved from a fringe field of study in the late 1970s and early 1980s to a primary focus of environmental economists over the past decade. Despite its rapid growth, practitioners of valuation techniques often find themselves defending their practices to both users of the results of applied studies and, perhaps more troubling, to other practitioners.

One of the more heated threads of this internal debate over valuation techniques revolves around the types of data to use in performing a valuation study. In the infant years of the development of valuation techniques, two schools of thought emerged: the revealed preference school and the stated preference school, the latter of which is perhaps most associated with the contingent valuation method.

In the midst of this heated debate an exciting new approach to non-market valuation was developed in the 1990s: a combination and joint estimation of revealed preference (RP) and stated preference (SP) data.

This book provides a systematic, cohesive and in-depth discussion of the theory and methods of joint estimation, as well as showcasing recent developments in theory and methods of data combination and joint estimation via a set of original, state-of-the-art studies that are contributed by leading researchers in the field.

Yikes!

Have we bottomed out?

I'm not sure, but this is encouraging:

A trade group report today on sales of existing homes is expected to show selling increased slightly in January. The increase would mark the second straight month of improvement from November's record low.

Sales are expected to rise to a seasonally adjusted annual rate of 4.79 million units, from 4.74 million a month earlier, according to economists surveyed by Thomson Reuters. The National Association of Realtors' report is due at 10 a.m. EST.

UPDATE: OK. Maybe Not.

The pace of sales of existing home fell in January to a 4.49 million-unit annual rate while home prices and inventories dropped, the National Association of Realtors reported.

Well-intentioned, but slightly misguided, opinion on higher gas prices

From the Christian Science Monitor, via Yahoo!:

Remember last summer, when gas prices broke new records every day and the era of "energy independence" was on the horizon? Gas is half what it was then, but not for long. When OPEC's planned production cuts hit, tightening the global supply of oil just when economies are poised to resume growth, the world may well face the worst oil crunch in history.

The way to avert the brunt of that? It might not be pretty at first, but a price floor – a government-mandated minimum – on retail gas will buy us the time we need to wean us off the oil.

I like the intent, but binding price floors cause screwy incentives for producers to overproduce. A better solution is to simply increase the federal gas tax by $1 ($2) a gallon.  Same set of incentives without the mismatch between what producers want to produce and what consumers want to buy.  Making that change (tax rather than price floor), the rest of the opinion makes better sense...