Environmental Economics

Webinar announcement

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.

Forgive the politics

From The Onion (Senate passes blame):

In a rare display of bipartisanship, senators on both sides of the aisle set aside their differences Tuesday and passed off responsibility for the nation's problems by an overwhelming 91-8 margin. "As senators, it's our duty to get any sort of blame out of Congress and onto the president's desk as quickly as possible," said Majority Leader Harry Reid (D-NV), who recalled a similar 2005 decision in which the Senate firmly rejected accountability by a vote of 93-6. "Someone has to accept this blame and do the right thing, and both Democrats and Republicans alike understand the importance of fighting tooth and nail to ensure that it's not us." President Obama is widely expected to veto the blame, sending it back down to the House of Representatives.

Economics and religion

I was sitting in church this past Sunday morning listening to the annual stewardship sermon "... and money is not just a medium of exchange..." and I'm thinking "... amen preacher, it's also a unit of account and a store of value."

Picking winners

Have you taken the Freakonomics global warming quiz? It involves a series of True/False questions that are designed to get the reader to agree with the SuperFreakonomics climate chapter. "Uncertain" is not a possible answer even when we get to the technological questions. Such as:

There exists an engineering design that provides a means of delivering enough sulfur dioxide to the stratosphere on a continuous basis to effectively cool the Earth. The estimated cost of building and implementing this technology is a few hundred million dollars.

True/False

I would answer uncertain (as would at least one engineer). We don't know if it will work as intended, we don't know if there will be unintended consequences and we don't know if it will actually be cheap. What strikes me as so odd is the narrow technological thrust of the whole SuperFreak geoengineering message:

A much better approach, we conclude, is geoengineering. The scientific evidence suggests that either the stratoshield or increased oceanic clouds would have a large and immediate impact on cooling the Earth, unlike carbon-emission reductions. The cost of these solutions is trivial compared to the cost of lowering carbon emissions — literally thousands of times cheaper! Perhaps best of all, if something goes wrong and we decide we don’t like the results of the stratoshield or the oceanic clouds, we can stop the programs immediately and any effects will quickly disappear. These two geo-engineering solutions are completely reversible.

Economists love to make fun of government bureaucrats for "picking winners." In other words, picking winners involves deciding which technology will come out on top and backing it with the full force of government. If you are slightly ignorant about how this stuff works it is quite likely that you might pick the wrong winner. This is why economists tend to advocate government expenditure for R&D and then allow the power of market forces decide the winning technology.

Note: I still haven't received my copy of SuperFreak and so still haven't read the climate chapter. These comments are based entirely (or, at least 95%) on my reading of the post link above. 

Another note: It is not just "environmentalists" who are criticizing this chapter. "Jason" in the comments section says this which seems right on:

The question isn’t whether geoengineering deserves a seat at the table - everyone agrees it is worth researching. The question is whether it is worthwhile to expend resources to reduce carbon emissions immediately while this research is being conducted. Your critics seem to say, “Yes, it certainly is.” As far as I gather from this blog post, you are saying, “No, it isn’t.” To accuse your critics of failing to “approach the questions like economists” is extremely disingenuous. There is a substantive economic question here about whether geoengineering type solutions and reducing carbon emissions are substitutes or complements. You have failed to engage with your critics who argue that they are complements.

The Senate cap-and-trade bill (won't create jobs)

From the Sunday NYTimes comes the details (Senate Global Warming ...):

The Senate bill aimed at reducing global warming pollution will initially grant billions of dollars of free emissions permits to utilities and industry but will require the bulk of the money be returned to consumers and taxpayers, according to newly released details.

The bill will also provide a cushion to energy-intensive manufacturing companies to ease the transition to a lower-carbon economy and to help them compete internationally, although the subsidies will disappear over time. The measure also sets a floor and ceiling on the price of permits to emit carbon dioxide and other greenhouse gases.

With these and other changes considered, the Environmental Protection Agency estimates that overall cost of the bill at roughly $100 a year per household, similar to that of a House climate change and energy bill passed in June.

The Senate measure, sponsored by Senators John Kerry of Massachusetts and Barbara Boxer of California, both Democrats, aims to reduce greenhouse gas emissions under a cap-and-trade system that sets a nationwide limit on emissions but allows polluters to buy and sell permits to meet it.

The bill’s targets for overall emissions reductions are 20 percent below 2005 levels by 2020, 42 percent by 2030 and 83 percent by 2050. The House bill’s limits are similar, except the target for 2020 was set at 17 percent after negotiations with utilities and other major sources of emissions.

...

The latest version includes new financing for research on capturing and storing carbon dioxide emissions from power plants, more money for low-carbon transportation projects, additional assistance for rural communities and more favorable treatment for agriculture and forestry.

“We’ve reached another milestone as we move to a clean energy future,” Mrs. Boxer said in a statement, “creating millions of jobs and protecting our children from dangerous pollution.”

Cap-and-trade won't create millions of jobs in the way that a naive reader might perceive that statement. Jobs will be created in certain industries and we'll be able to point a finger at those and count them up. Jobs will also be lost elsewhere as a result of regulation and these will be more difficult to point out and count up. The net effect will be minor noise in the symphony of cyclical, structural and frictional job market. In other words, don't expect the unemployment rate to fall as a result of cap-and-trade.

Has peer-review been rendered irrelevant?

Bold headline this morning: Mobile Use is Linked to Brain Tumours.  The lead:

LONG-term mobile phone users could face a higher risk of developing cancer in later life, according to a decade-long study.

The problem?  Apparently the results were released to the media before (or simultaneously with) submission for peer-review:

Preliminary results of the inquiry, which is looking at whether mobile phone exposure is linked to three types of brain tumour and a tumour of the salivary gland, have been sent to a scientific journal.

The findings are expected to put pressure on the Government – which has insisted that mobile phones are safe – to issue stronger warnings to users.

My question--What's the point of peer-review if it's irrelevant to calls for Government action?

Hey John, I think she is calling us delusional

Ohio State research news:

People with relatively extreme opinions may be more willing to publicly share their views than those with more moderate views, according to a new study.

The key is that the extremists have to believe that more people share their views than actually do, the research found.

...

“When people with extreme views have this false sense that they are in the majority, they are more willing to express themselves,” said Kimberly Rios Morrison, co-author of the study and assistant professor of communication at Ohio State University.

False sense?  I know I would be in the majority...if everyone would just listen to me.

The law of unintended consequences and Waxman-Markey

From Environmental Capital at the WSJ:

The law of unintended consequences strikes yet again.

Global plans to tackle climate change, from the Kyoto Protocol to the recently-passed Waxman-Markey bill, have a fatal flaw: They essentially encourage large-scale deforestation, which pretty much undermines the whole idea of curbing greenhouse-gas emissions in the first place.

That’s the argument from a new paper published in Science today, written by Princeton University’s Tim Searchinger and others. The upshot? Clearing out forests to use the wood for bioenergy clearly has an environmental cost, but that’s simply not accounted for in an

y of the prevailing climate-change programs. Kyoto, the European cap-and-trade plan, and the House climate bill all treat bioenergy as carbon-neutral; nobody counts the effect of disappearing forests.

“Literally, in theory, if you chopped up the Amazon, turned it into a parking lot, and burned the wood in a power plant, that would be treated as a carbon-emissions reduction strategy,” DrMr. Searchinger told us. (Here’s a video interview with more on the paper.)...

The value of protecting polar bear habitat

From the NYTimes (Polar Bear Habitat Proposed for Alaska):

The Interior Department on Thursday proposed designating more than 200,000 square miles of land, sea and ice along the northern coast of Alaska as critical habitat for the shrinking polar bear population.

The area, the largest single designation of protected habitat for any species, encompasses the entire range of the two polar bear populations that exist on American land and territorial waters. Government scientists estimate that there are roughly 3,500 bears in the two groups, known the Chukchi Sea and the Southern Beaufort Sea populations.

Officials said the bears’ range was shrinking because of the disappearance of sea ice linked to global warming. 

...

The habitat rule will be open to public comment for 60 days, and the agency will conduct additional scientific and economic studies of the proposal’s impact. The agency is required to publish a final critical-habitat rule by June 30, 2010.

I haven't done a back-of-the-envelope benefit cost analysis in awhile so I googled "polar bear" and "economics." It retrieved nothing except some stuff on the Canadian Artic polar bear trophy hunt. Somehow, I don't think that is what we are after.

So there is no good measure of the existence value of polar bears in the literature and the Interior Department must come up with something within 6 months or so. Is there a study being conducted? If not, good luck!

Dirty Job

We have a seminar speaker today so here is my brutal schedule:

• 12:00-1:00, 1:15-ish: lunch with speaker
• 2:00-3, 3:30-ish: Garth Heutel (UNCG) "Learning, Externalities, and Hybrid Vehicle Adoption"
• 3:30-?: Social hour

I was adopted when I was 6 weeks old so I'm sure I'll have lots of questions during the seminar.