Environmental Economics

Economic impacts of Pitino's arena are ginormous

Arena's economic impacts estimated:

Louisville's downtown arena has helped generate more than $100million in nearby investment and construction, according to an economic impact analysis released Monday.

The report, issued during the Louisville Arena Authority's monthly meeting, acknowledges that it's hard to determine the factors behind those projects but said next year's opening of the arena at Second and Main streets “certainly has played a major role.” ...

The arena, along with other downtown investment, played a role in White Castle's $850,000 expansion of its aging restaurant at First and Market streets, said Eddie Smith, the company's regional director of operations. ...

Other projects cited as proof of the arena's economic impact include a $1million renovation of The Gillespie, a venue rented for weddings and other events at 421 W. Market. But facility director Ashley Knight said Monday that the arena was not a factor in the renovation. “None at all,” she said. ...

The $7,000 report was produced by Louisville's CityVisions Associates, a consulting firm run by Barry Alberts, former executive director of the Downtown Development Corp., and Bill Weyland, an architect and developer who is a partner in the Whiskey Row Lofts — one of the projects included in the report. The Kentucky State Fair Board, which will oversee the arena's daily operations, paid for the study.

Arena authority chairman Jim Host welcomed the report's findings.“This project is not only alive and well, but it is generating the economic impact that we said it would,” he said.

As far as I know the vast majority of peer-reviewed studies finds that a new arena (or stadium) has no positive (or negative) economic impact. I'm always puzzled by the need felt by those receiving public funds to justify them with an economic impact study.

Update: I forgot to mention yesterday that the $100 million in economic impacts, at least those mentioned in the news, are costs, not benefits. Costs are the time and money devoted to producing something. Benefits are the outputs (goods, services) that make people happy.

Freshwater Environmental Economics

From the inbox:

One of the most ambitious environmental restoration efforts ever proposed for the Great Lakes appears imminent following the emergence from a House-Senate conference committee of legislation providing $475 million for a comprehensive Great Lakes restoration and protection initiative.

"We call on the House and Senate to approve, and the President to sign into law, the conference committee report. Our region is well prepared and ready to get to work cleaning up polluted hot spots and restoring recreational opportunities that are vital to local economies," said Great Lakes Commission Chairman Illinois Governor Pat Quinn.

The Great Lakes Restoration Initiative (GLRI) was proposed by President Barack Obama in his 2010 budget to focus on the most critical environmental concerns facing the Great Lakes, including invasive species, toxic sediments, nonpoint source pollutants and wildlife habitat loss. Following passage by the House at the $475 million funding level sought by President Obama, the measure was approved by the Senate at $400 million. A conference committee announced agreement yesterday on $475 million to support the first year of the Initiative.

The legislation now goes back to both houses of Congress for final approval and then to the President to be signed into law.

"This is truly a watershed moment," said Quinn. "By fully funding the Initiative in 2010, the congressional conference committee is reinforcing the broad regional support for Great Lakes cleanup and restoration as well as the national recognition of the Great Lakes as the country’s most valuable freshwater resource."

Webinar

The Energy Collective has another webinar coming up on 10/28, 1pm EST on Rethinking the Electric Grid: Modernizing the Nation's Transmission System. Marc Gunther will be moderating. This will be is the second in the series they are putting on this fall:

With $4 billion of the 2009 American Recovery and Reinvestment Act designated for the “Smart Grid,” or modernization of the nation’s electrical transmission systems, investment has accelerated at a feverish pace in viable projects initiated by utilities, research facilities, and technology companies.

The Smart Grid represents more than a commercial opportunity. It will make possible more efficient and lower cost delivery of power, better informed customers, smart appliances, distributed energy, electric cars and a host of other innovations yet to be invented.

I've been walking these streets at night / Just trying to get it right*

I received SuperFreakonomics: Global Cooling, etc in the mail yesterday and plan to read the climate change chapter tonight while watching The Office reruns on TBS. But, I'm wondering, should I wait for the second edition?

Levitt, a University of Chicago economist, said he does not believe there is a cooling trend. He said the line was just an attempt to note the irony of a cool couple of years at a time of intense discussion of global warming. Levitt said he did not do any statistical analysis of temperatures, but "eyeballed" the numbers and noticed 2005 was hotter than the last couple of years. Levitt said the "cooling" reference in the book title refers more to ideas about trying to cool the Earth artificially.

Source: Forbes (Statisticians reject global cooling).

*Alternative title: I've been eyeballing some recreation demand data. Might get a book out of it.**

**Another alternative title: I hope for me sake I have tenure.***

***Still another: You shook me all night long.****

****Each of these alternatives is better than the title. But I heard Patience earlier today and can't get it out of my head. Warning: Watch this video and you'll never get those red shorts out of your head. How SuperFreaky is THAT?

I confused The Economist

In response to my post this morning, where I wrote:

Follow the bouncing ball of unintended economic consequences.  Banks forward credit to people who can't afford it at interest rates that are really high. Predictably, default rates on credit cards rise.  Perhaps more predictably, to protect the consumer from evil bankers, the Government passes regulations on the interest rates that can be charged.  Sounds 'fair' until you realize that banks have to look for ways to recover the lost revenues from not charging market based interest rates.

The Free Exchange blog at The Economist writes:

I don't understand this. If credit card companies are able to increase rates on good customers without losing them, why wouldn't they have done that before? Shouldn't we assume that firms make as much money as they can off all customer types all the time?

Perhaps.  My guess is that credit card companies are hoping the new interest rate cap rules will force everyone to raise fees.  But my next guess is that it won't work.  At least one company is going to realize that if everyone else raises fees, I can attract customers with a no-fee credit card.  As soon as one leads, the rest will follow.  I probably should've said that up front.  But then I wouldn't have gotten a mention on The Economist web-site.  And being the glory-whore that I am...

Geoff Styles on green energy jobs

Missing the point on energy and jobs:

Our employment goal for energy should not be to have as many people working in the energy sector as we can, but to have the most efficient and cost-effective energy sector possible, in order to promote job creation and retention in the rest of the economy, where the vast majority of jobs are found. Our decisions about energy policy should not depend on the creation of a few green jobs.

... it is even more essential for the long-term interests of the country that we not obsess about this one aspect of energy, to the detriment of others that will affect overall US employment and international competitiveness long after the unemployment rate has returned to its normal range.

When legislation like the Kerry-Boxer climate bill, which includes many provisions that would make energy more expensive for consumers and businesses, is marketed as a jobs bill it merits a skeptical reception. Stimulating jobs in the 6-10% of the economy devoted to energy seems unlikely to compensate for the loss of jobs that would ensue throughout the broader economy, if climate legislation caused energy costs to soar. That may, however, be a necessary evil, and the question we should really be asking is not how many green jobs such legislation will create, but whether on balance its provisions are truly justified in order to address climate change--even if they resulted in a net loss of employment, as I strongly suspect they would. Unless the answer is an unequivocal yes, we could be setting our long-term energy policy on the basis of a metric that is only a minor contributor to either energy costs or total economic activity, for reasons that seem unlikely to stand the test of time.

Who is this clown? ;->

Depending on your perspective, this is either really good or really bad--or somewhere in between

Breaking news from AP:

Just weeks before an international conference on climate change, the United Nations signaled it was scaling back expectations of reaching agreement on a new treaty to slow global warming.

Spam trivia

I'm now filtering 71 email addresses that have sent unsolicited email messages to my gmail account within the past, oh, several weeks (the number is 36 for my appstate account). This is in addition to the 609 messages that Google has automatically relocated to my spam folder in the past month.

Consumer surplus makes it to Congressional Subcommittee testimony

From the government:

The House Natural Resources Committee, Subcommittee on Insular Affairs, Oceans and Wildlife, led by Del. Madeleine Z. Bordallo (D-GU), will hold an oversight hearing on implementation of the Magnuson-Stevens Fishery Conservation and Management Act of 2006, which President Bush signed into law on January 12, 2007.

Subject: House Subcommittee on Insular Affairs, Oceans and Wildlife
Oversight Hearing on implementation of the Magnuson-Stevens Fishery Conservation and Management Act of 2006

When: Tuesday, October 27, 2009, at 10:00 a.m.

Where: Room 1334 Longworth House Office Building

...

The hearing will be webcast live on the Committee's Web site at: http://resourcescommittee.house.gov.

The unintended consequences of fairness

Follow the bouncing ball of unintended economic consequences.  Banks forward credit to people who can't afford it at interest rates that are really high. Predictably, default rates on credit cards rise.  Perhaps more predictably, to protect the consumer from evil bankers, the Government passes regulations on the interest rates that can be charged.  Sounds 'fair' until you realize that banks have to look for ways to recover the lost revenues from not charging market based interest rates. 

The solution?  Charge higher fees to customers with good credit. 

The banks are starting to charge fees to reliable customers in response to a slew of new credit card industry regulations that will limit when banks can hike interest rates. Cardholders who get a new annual fee notice in the mail will be in a no-win situation.

"They can either pay that fee or they can close the account, and if they have had the account for a while and they close it, they are potentially going to hurt their credit card score," said Woolsey.

Analysts say right now the banks are trying to figure out what their customers will tolerate. Many say they'd cancel cards with a high new annual fee.

Still sound 'fair'?