Environmental Economics

My latest post at The Energy Collective

Is called this: Are limits on economic growth good for the environment? It starts like this:

There has been a lot of buzz about how the current recession has been good for the environment. The implication is that, well, if a short-term recession is good for the environment how about a longer term recession in the form of limitations on economic growth?

And ends like this:

Finally, note that economic growth is ultimately the collective outcome of individual decisions. There is nothing wrong with economic growth, per se. In fact, it is what individuals strive to achieve (a better lifestyle for themselves and their children). These individual decisions are only indirectly affected by macroeconomic policy. The wrong incentives (i.e., no climate change mitigation policy) are the problem. Cap-and-trade, pollution taxes, etc, can lead to an improvement of the environment along with positive economic growth (albeit, less positive economic growth relative to a no-regulation scenario).

Weird: I've been working on a similar study using participant-observation methods

"An hour or two of television per day simply does not provide enough information to effectively mock mediocre sitcoms, vapid celebrities, music videos, and talk-show hosts—an essential skill in modern society," said Dr. Madeleine Ben-Ami, a professor of cognitive science and chief author of the study. "The average person requires a minimum of four to six hours of television programming each day to be conversant on the subject of The Apprentice or able to impersonate Anna Nicole Smith."

Source: The Onion

Marginal analysis

US Airways is bumping up its first and second checked bag fees by $5 apiece.

The marginal costs of flying just rose above the marginal benefits. I think I'll drive.

Source: US Airways raising ...

From now on call me Lonewolf

From MoDo:

Pseudonyms have a noble history. Revolutionaries in France, founding fathers and Soviet dissidents used them. The great poet Fernando Pessoa used heteronyms to write in different styles and even to review the work composed under his other names.

As Hugo Black wrote in 1960, “It is plain that anonymity has sometimes been assumed for the most constructive purposes.”

But on the Internet, it’s often less about being constructive and more about being cowardly.

No one has hired me on as a consultant lately so I'm raising my consulting fee

From CNNMoney (Beer prices are going up ...):

Brewers across the globe are hiking prices to compensate for lower sales volumes and higher commodity costs.

Several things are going on here. First, rotten GDP (i.e., income) growth has reduced the demand for beer which reduces the amount of beer sold. This creates a surplus which should push prices down. Higher production costs has reduced the supply of beer which creates a shortage leading to a price increase. Ignoring the demand decrease (i.e., ignoring the silly "compensate for lower sales volumes"), prices will be rising because of higher production costs.

Hat tip: PEC

Ash hole update

On May 13, 2009 the Columbus Dispatch reported sightings of invasive Ash Borers (Ash tree eating beetles) in my town.  Today, the Dispatch reports that the baseball bat slaughtering insect may be unstoppable. 

The emerald ash borer has been found in Pike and Scioto counties.

The voracious beetles were found in special traps Ohio Department of Agriculture officials hung in trees in Pike, Scioto and 42 other Ohio counties in May and June.

Inspectors are still in the process of retrieving and checking those traps.

The beetles were found just outside the Portsmouth city limits in Scioto County and near the Pike State Forest in Pike County, according to Kaleigh Frazier, an Agriculture Department spokeswoman.

Borers were first discovered in Detroit in 2002, where they likely hitched a ride from China. They were discovered in Ohio near Toledo in 2003 and have since spread to 52 counties, including Franklin, Delaware, Fairfield, Licking and Union counties in central Ohio.

Their larvae eat tunnels through the soft wood under the bark of ash trees. The tunnels damage the trees' water-circulation systems and kill the trees within three to five years.

Ohio at first tried to eradicate ash-borer infestations, but stopped after federal funding was cut. It now tries to track the beetles' spread through the use of the traps and slow its march across the state by banning the movement of ash firewood out of infested counties.

Economics > Accounting

From the inbox:

Dr. Whitehead,

I am the girl who was in your class by mistake at 11 am. Just wanted to let you know that your class was better!

Service Learning (community-based research) in a Benefit-Cost Analysis course

Classes start today and I'm relatively excited since I'm trying something different this year. Here is an email that went out to "Appalachian and the Community Together" participants:

Subject: Seeking Benefit-Cost Analysis Projects for Fall Course!

Greetings ACT Community Partners!

Does your agency need assistance with analyzing the efficiency of its overall operation, utilities, or a specific program?  In hard economic times, evaluating your efficiency can help you find funds within your budget that can be used in other ways.  Each fall semester, John Whitehead teaches a course on benefit-cost analysis -- a carefully performed analysis that weighs the social benefits and costs can be an important component of agency decision-making. Students in his course are capable of performing any component of benefit-cost analysis including benefit analysis, cost analysis, cost-effectiveness analysis and full blown benefit-cost analysis depending on agency needs and data availability. Students are interested in a wide range of government, non-profit agency, or business projects or programs. Previous projects include an examination of the installation of energy-efficient lighting in the ASU Plemmons Student Union and the relocation of the ASU Challenge Course from its Broyhill campus location to Camp Broadstone.

If you are interested in participating with this class in Fall 2009, please contact John directly at the phone/email below.

ECO 4660. Benefit-Cost Analysis
Fall 2009
Instructor: John Whitehead
Office: Raley Hall 3094
Phone: (828)262-6121
e-mail: [email protected]

Last year I experimented with this with smaller on-campus projects. This year we'll be doing full-blown benefit-cost analysis projects for real people/agencies. One of these projects is to evaluate the Appalachian Institute of Renewable Energy's goal of one megawatt of solar power in Boone by 2012.

Here is a link to the course syllabus: http://www.appstate.edu/~whiteheadjc/ECO4660. Comments welcome!

How could he not?

President Barack Obama announced Tuesday the nomination of Ben Bernanke to a second term as Federal Reserve chairman, opting for continuity in U.S. economic policy despite criticism in Congress of the low-key central banker's frantic efforts to rescue the financial system.

Source: WSJ Morning Brief.

One Stone (Cash for Clunkers), Two Birds (Stimulus and the Environment) and Inefficiency

We've made the argument before--stimulus policy should target stimulus, environmental policy should target environmental goals.  But using stimulus policy to address environmental goals is a slippery slope.  Why?  Because, any environmental benefits are likely to be higher cost than if they were targeted directly, and the likely environmental benefits will be lower than desirable.  While we've been mocked for making that claim, we're not alone:

"Cash for Clunkers" has generated a surge in car and truck sales, as well as a comparable increase in complaints about the program. But whether or not the program -- which is due to end at the end of the day today -- meets environmental goals of reducing gasoline consumption and greenhouse gas emissions has received less attention.

"As an environmental program, Cash for Clunkers is basically overpaying for the environmental benefits," said Christopher Knittle, an economics professor at the University of California at Davis who analyzed the Cash for Clunkers impact on the environment.

...

Knittel, the economist at Davis who has studied gas prices and their effects on driving behavior, found that while the program might benefit the economy, it is an inefficient way to take older cars off the road, to lower carbon emissions and to reduce gasoline consumption.

...

But as concerns mount about reducing U.S. dependence on foreign oil and the increase in CO2 levels, analysts acknowledge that making significant headway is not always easy, quick, inexpensive or palatable. Expecting more from the Cash for Clunker program might be too much.

"It is baby step," said Knittle, "but probably an expensive baby step."

I agree.  I don't think Cash for Clunkers was a bad idea.  I'm just concerned that using stimulus policy to target environmental goals provides inaccurate evidence that achieving environmental goals is expensive and may make it more difficult to get economically sound, more efficient, environmental policy passed in the future.