Environmental Economics

Well, they should probably put down some pesticide

Slugger Josh Hamilton, who battles addictions, told the New York Post, "I could smell weed in the outfield. It was crazy. I was looking at the cops a couple of times during the game."

via www.nbcbayarea.com

Weeds in the outfield of a Major League Stadium?  That groundskeeper should lose his job. Not sure why the cops need to be involved though.  That seems a bit extreme for a few dandelions.

Hell no I ain't happy*

I stood 3-4 deep from the stage at the DBT show last night and didn't much care if I looked like an middle-aged idiot (which I did, I guess but there were others [idiocy loves company]). It was a good show. That's Patterson Hood to the right. There were lights behind Cooley so I couldn't get a decent picture.

My favorite part of the show was during the encore when the big furry student (... male ...) stage rushed and planted his large self right in front of me. Then decided he needed about 2 more feet all around to really get his dance on. Whoa big fella! But, I'm glad you enjoyed the show.

The show was scheduled to start at 9 with an opening act. I got there about 10 and found out the opening act started at 9:30. They played until 10:30 and DBT didn't start until 11:00 (why am I always surprised when this happens?). I got home at 1:10 am, got to sleep around 1:30, then inexplicably woke up at 5:15. Good morning!

It is really a good thing that nothing is going on today (other than George Parson's electric car seminar** ... I already have my first hard-hitting question lined up: "Have you ever driven a Volt?" and then a follow-up: "What's that like?" Then I'll follow that answer up with something like: "That's awesome." [University of Chicago seminar style]).

Notes:

*But I ain’t too crappy, too crappy at all.

**Abstract: This paper presents a stated preference study of electric vehicle choice using data from a national web-based survey. In our choice experiment respondents were asked to choose between two electric versions of their preferred gasoline vehicle and their preferred gasoline vehicle. The electric vehicles varied in attributes and price. The preferred gasoline vehicle was the opt-out alternative. Using the response data we valued five electric vehicle attributes: driving range, charging time, fuel cost saving, pollution reduction, and performance. Driving range, fuel savings, and charging time lead in terms of importance to respondents. Individuals were willing to pay (wtp) from $35 to $75 for a mile of added driving range, with wtp increasing at a decreasing rate with distance. They were willing to pay $425 to $3250 per hour of charging time (for a 50 mile charge), with wtp increasing at an increasing rate for shorter charges. Finally, people were capitalizing about 5 years of fuel saving into the purchase price of an electric vehicle. We simulated our model over a range of electric vehicle configurations and found that people with the highest values for electric vehicles were willing to pay a substantial premium. At the same time, our results suggest that battery cost must drop significantly before electric vehicles are economic.

 

Local power

Byers Automotive Group has taken major leaps with its plans to install wind turbines at two Central Ohio dealerships.

The Columbus-based company said it has won approval for a $200,000 grant from the state Department of Development to install commercial turbines at its Byers Mazda Subaru dealership on Billingsley Road in Columbus and its Byers Toyota site in Delaware. The Delaware site is a former Ford dealership that underwent a $3.5 million renovation last year.

The estimated cost of the installations at the two sites is $600,000. Byers told Columbus Business First last year its Delaware dealership, the first tagged for the turbine installation, could save up to $6,000 annually in electricity costs with the new hardware.

Quick (and probably bad) math: The cost to the dealerships is $400,000 ($600,000 installation cost-$200,000 subsidy).  That's $200,000 per dealership.  Let's assume that is paid in lump sum today.  At a 0% discount rate, it would take 33.33 years in $6,000 per year energy savings to recoup the $200,000 investment.  At 1% discount rate, it would take between 40 and 41 years. At a 2% discount rate it would take 55-56 years.  At 3% or greater discount rate, it is impossible to recoup a one-time investment of $200,000 earning a return of $6,000 per year.  Unless of course there are side benefits, like increased sales. Or government incentives. Or...what am I missing?

Read more: Byers gets grant, permits for Columbus, Delaware wind turbines | Business First

Whole Lotta Rosie

For those of you who don't read the comments, here's one from new reader Rosie that I found, well, entertaining.  And it fits the halloween theme because we're scaring the hell out of her:

Hi, I'm new and I hope a little welcome ?
"benefit-cost analysis,"
......"finding better ways to attach monetary values to the environmental & natural resources for use in benefit-cost analysis,".......
You are scaring the hell out of me.
For one thing any monies asked for, for saving the environment will come from the average Joe&Sally who are already doing it tougher then ever.Corporate will pass the buck as ever.
Are we wanting insurmountable poverty.
ie; 3rd world ? 'cause in our gusto it's coming to us, I fear.
A Little Story:
Olive Oil is cheaper to produce and more environmentally friendly than Canola, Extra Virgin Olive Oil is cheaper still.
SO;why do we pay 4/5 times more for Olive Oil.?/!
Surely eliminating/minimizing the worst would go a long way.
Eliminating Petrol Guzzlers...what were the new cars rolled out by Mercedes & GM ?
And eliminate cigarettes,
who needs to smoke ?....REALLY...?
Legislation will fix this in one fell swoop,YES ?
Thanks!

A happy halloween picture

I have done great harm, but my time is coming to a close

No, I wasn't one of those who ignored the faulty concrete tests but I am an old goat (Student Manifesto for New Economics):

We, the undersigned, make this accusation: that you, the teachers of neoclassical economics and the students that you graduate, have perpetuated a gigantic fraud upon the world.

You claim to work in a pure science of formula and law, but yours is a social science, with all the fragility and uncertainty that this entails. We accuse you of pretending to be what you are not.

You hide in your offices, protected by your mathematical jargon, while in the real world, forests vanish, species perish and human lives are callously destroyed. We accuse you of gross negligence in the management of our planetary household.

You have known since its inception that one of your measures of economic progress, the Gross Domestic Product, is fundamentally flawed and incomplete, and yet you have allowed it to become a global standard, reported day in, day out in every form of media. We accuse you of recklessly projecting an illusion of progress.

You have done great harm, but your time is coming to a close. Your systems are crumbling, your flaws increasingly laid bare. An economic revolution has begun, as hopeful and determined as any in history. We will have our clash of economic paradigms, we will have our moment of truth, and out of each will come a new economics – open, holistic, human scale.

On campus after campus, we will chase you old goats out of power. Then, in the months and years that follow, we will begin the work of reprogramming your doomsday machine.

via realclimateeconomics.org

I haven't read this other one yet (it is much longer) but note that this blog impedes progress:

The founding members of E3 network penned a treatise on the failings of neoclassical approaches to environmental economics several years ago.

Please feel free to laugh at this post without fear of appearing biased

Here is the Washington City Paper's advice to staff on attending the dueling Jon Stewart/Stephen Colbert rallies this weekend:

1. You may attend the rallies in a non-participatory fashion.
2. However, because the rallies are comic events, you may not laugh.
3. The act of not laughing, though, can be just as politically loaded as the act of laughing. Therefore, staffers are advised to politely chuckle, in a non-genuine manner, after each joke.
4. To avoid any perception of bias, please make sure to chuckle at all jokes, whether or not you find them funny. As journalists, we must make sure to not allow our personal views of “humorous” or “non-humorous” to affect our public demeanor.
5. Likewise, it could be devastating to our impartial reputation if our staffers were seen laughing at something that was not intended as a joke, thereby appearing to mock the entire event. If we are lucky, the comedians will have a drummer on hand whose rim-shots may be used as a cue for when to politely chuckle.
6. If no non-verbal cues for laughter are available, please observe audience members around you. If they are laughing, imitate their laughter with a non-genuine polite chuckle. If they are not laughing, remain stone-faced. Whatever you do, do not apply your own personal cognitive skills to determining the humorousness of any particular clip. Such an approach exposes us to charges of bias.
7. On the other hand, a situation could arise where partisan foes of the Comedy Central hosts laugh at them in a derisive manner unrelated to the timing of their on-stage jokes. In this case, your failure to join in the mockery could potentially be interpreted as a sign that you disagree with the derision—an equally distasteful indication of bias. Please follow the above guidelines and also chuckle politely, but not genuinely, at any instances of counter-comedy.
8. In our experience, public appearances by comedy figures also draw audiences whose members frequently make jokes amongst themselves. These attempts at humor might not necessarily fit into the rational example of protesters versus counter-protesters outlined in the guidelines above. However, you could nonetheless indicate a great deal about your personal biases via your decision as to whether or not you laugh along when the person next to you riffs about, say, marginal tax rates. Please make sure to follow the above guidelines and respond via polite, non-genuine, mild guffaws to the jibes of amateur comics in the audience.
9. We’re also aware that the large crowds expected at the rallies could produce a cacophonous din, one in which you are unable to discern which jokes are being made by audience members, counter-protestors, or the day’s main attractions—and, worse still, where observers may think you are laughing at an anti-Republican joke when you are actually laughing at an anti-Democrat joke. To protect our cherished reputation against such a danger, I have arranged for each of you to be issued a pair of earplugs. Should the event grow too raucous, please insert these earplugs immediately. Once you have inserted the earplugs, please chuckle politely, and non-genuinely, every 74 seconds, to maintain the appearance of non-biased and appropriate responses to the event.
10. You are free to laugh heartily and genuinely at any jokes that target the terrorists.

via www.washingtoncitypaper.com

HT: BG (via FB)

Carrots and sticks and taxes and exemptions and non-payments for ecosystem services

The W[orld] B[usiness] C[ouncil for] S[sustainable] D[evelopment] believes that green taxes can deliver environmental improvements, "in some circumstances". But the companies also note that tax exemptions can function like payments for ecosystem services to reward positive conservation efforts. "The difference is that the PES is a direct payment for a service, whereas the exemption is effectively a non-payment (of monies that would otherwise be due as tax)".

via www.euractiv.com

The simple economics are simple: a marginal tax on an undesirable action is the equivalent of a marginal subsisdy on (payment for) the anti-undesirable action.  But, as usual, my guess is that the real world is more complicated than simple economics world and nonpayments (tax exemptions) for not screwing up the environment are not the equivalent of a direct payment for ecosystem services. 

(Some) National Park fees are too low (during peak visitation seasons)

The title above should have been the title to yesterday's post. Here is a recreation demand problem for my students posted over at my course blog:

Given:

• MB = 100 - Q
• MC = TC + CC
• CC = Q - 50
• TC = 10

where MB is marginal benefit, Q is recreation visits, MC is marginal cost, TC is travel cost and CC is congestion cost. Answer the following questions:

1. How many visits would result without a fee?
2. What is the consumer surplus associated with these visits?
3. What is the efficient fee?
4. How many visits would result with the fee?
5. After the fee:
   a. What is the consumer surplus?
   b. What is the government revenue?
   c. What is the deadweight loss?
   d. What are the avoided congest costs?
6. What are the net benefits of the fee policy?

The answers are in the comments at my course blog.

One thing had me awake this morning at 5:00. Why do we add the travel costs and congestion costs to get the marginal (social cost) curve since the recreation manager doesn't care about the (private) travel cost? The answer is because the efficient resource allocation should incorporate all of the benefits and costs. Am I right?

I have these crises of confidences all the time.

What I did in benefit-cost analysis class yesterday

I had meant to cover the nuts and bolts of the travel cost method but we ended up doing the benefit-cost analyses of recreation fees. Here is the picture I drew for a recreation facility facing congestion (it was awesome, the best teaching days are when you get totally absorbed in something relevant that you hadn't planned on).

Q is the number of recreation trips, the vertical axis is dollars (TC is travel costs). D is the recreation demand. Negative congestion externalities begin at the horizontal red line and then rise along the red/black line. The marginal cost of recreation is TC + fee + congestion cost. 

At the initial fee Q' trips are taken and the recreation benefits are areas (a + b + c). We discussed how these fees are efficient if the lost consumer surplus avoided by facility maintenance exceeds the deadweight loss of the fee.

With congestion the basic fee is not high enough as there is an additional cost of (f + c + e) in congestion externality cost. With the efficient fee (fee* in the picture) we avoid the congestion externality cost (a benefit of the higher fee) with an additional cost of c.

Conclusion: Just saying.

Alternative conclusion: since I was winging it (I tossed out my 2 day lecture prep) I could have gotten something wrong or done congestion differently. Any suggestions?