Environmental Economics

Small is beautiful

From the comments:

If your ad income is so small, why do you bother to annoy your readers with the ads?

Posted by: James | October 23, 2010 at 10:10 PM

James,

Did you read the part about dinner out and a stocked beer fridge?

Posted by: John Whitehead | October 25, 2010 at 11:30 AM

via www.env-econ.net

Why does the cool stuff always come with a catch?

Climate change caused by black carbon, also known as soot, emitted during a decade of commercial space flight would be comparable to that from current global aviation, researchers estimate.

The findings, reported in a paper in press in Geophysical Research Letters¹, suggest that emissions from 1,000 private rocket launches a year would persist high in the stratosphere, potentially altering global atmospheric circulation and distributions of ozone. The simulations show that the changes to Earth's climate could increase polar surface temperatures by 1 °C, and reduce polar sea ice by 5–15%.

via www.nature.com

Some blogger quotes John

Last week, in response to a NYT column by Greg Mankiw, I posed several questions about what I took to be holes in the column’s premise. Namely, that small changes in tax rates had outsized impact on human behavior. The questions also challenged the Harvard Professor (and former CEA chair)’s assertion that this marginal increase in tax rates would significantly reduce his incentive to work.

Rather than merely call the thesis nonsense, I instead posed a series of questions, the answers to which demonstrated how disengenuous the professor’s argument was.

This week, he responded. In an addendum. To “some blogger.”

via www.ritholtz.com

Centre Homecoming

Moon River?

But after a year of analysis NASA today announced that its LCROSS lunar-impact probe mission found up to a billion gallons of water ice in the floor of a permanently-shadowed crater near the moon's south pole.

That's enough, said researchers, to fill 1,500 Olympic-size swimming pools, all from one crater.

If there is ice there, it probably exists in other places on the moon as well. They also found silver, mercury, carbon monoxide and ammonia.

via abcnews.go.com

No point. Just cool.

Did Cap'n Trade work?

Tim's doing a great job on the death of the S02 market. I'm jealous about all the attention he is getting. So that everyone doesn't forget about me, here is a post from 2005 (in response to some of the comments about whether S02 trading worked):

From an EPA press release:

(Washington, D.C.-October 26, 2005) In its 10 years the Acid Rain Program has significantly reduced acid deposition in the United States by cutting sulfur dioxide (SO2) and nitrogen oxide (NOx) emissions from power plants, according to the program's annual report. The newly released Acid Rain Program 2004 Progress Report describes the environmental advances and public health, technology, and market-based improvements accomplished by the program. Widely acknowledged as one of the most successful environmental programs in U.S. history, the program serves as a model for a new generation of air pollution control programs, such as the Clean Air Interstate Rule, which will further reduce air pollution over the next decade.

...

A new analysis in the Journal of Environmental Management estimates the value of the program's human health and environmental benefits in the year 2010 to be $122 billion annually. Most of these benefits result from the prevention of health-related impacts, such as premature deaths and illnesses and workdays missed due to illness, but they also include improved visibility in parks and other recreational and ecosystem improvements.

Does anyone have the citation for this paper?

Update: here is a link to the forthcoming paper. The reference and abstract are below.

A fresh look at the benefits and costs of the US acid rain program

Journal of Environmental Management

Lauraine G. Chestnut,  and David M. Mills

Stratus Consulting Inc., P.O. Box 4059, Boulder, CO 80306-4059, USA

Received 1 October 2004;  revised 18 May 2005;  accepted 19 May 2005.  Available online 19 September 2005.

Abstract
The US Acid Rain Program (Title IV of the 1990 Clean Air Act Amendments) has achieved substantial reductions in emissions of sulfur dioxide (SO2) and nitrogen oxides (NOx) from power plants in the United States. We compare new estimates of the benefits and costs of Title IV to those made in 1990. Important changes in our understanding of and ability to quantify the benefits of Title IV have occurred. Benefits to human health now take a much higher profile because the contribution of SO2 and NOx emissions to the formation of fine particulate (PM2.5) is substantial, and evidence of the harmful human health effects of PM2.5 has emerged in the last 15 years. New estimates of the health benefits of PM2.5 reductions are the largest category of quantified health and environmental benefits and total over US$100 billion annually for 2010 when the program is expected to be fully implemented. Although important uncertainties exist in any specific estimate of the benefits, even if the estimates were calculated using more limiting assumptions and interpretations of the literature they would still substantially exceed the costs. Estimates of annualized costs for 2010 are about US$3 billion, which is less than half of what was estimated in 1990. Research since 1990 also suggests that environmental problems associated with acid deposition and nitrogen deposition are more challenging to resolve than originally thought and will require larger reductions in emissions to reverse. The greater than expected benefits to human health, the greater vulnerability of natural resources and ecosystems, and the lower than expected costs all point to the conclusion that further reductions in SO2 and NOx emissions from power plants beyond those currently required by Title IV are warranted.

Here is a working link to the paper at the JEM website.

Tim's doing a great job on the death of the S02 market. I'm jealous about all the attention he is getting. So that everyone doesn't forget about me, here is a post from 2005 (in response to some of the comments about whether S02 trading worked):

From an EPA press release:

(Washington, D.C.-October 26, 2005) In its 10 years the Acid Rain Program has significantly reduced acid deposition in the United States by cutting sulfur dioxide (SO2) and nitrogen oxide (NOx) emissions from power plants, according to the program's annual report. The newly released Acid Rain Program 2004 Progress Report describes the environmental advances and public health, technology, and market-based improvements accomplished by the program. Widely acknowledged as one of the most successful environmental programs in U.S. history, the program serves as a model for a new generation of air pollution control programs, such as the Clean Air Interstate Rule, which will further reduce air pollution over the next decade.

...

A new analysis in the Journal of Environmental Management estimates the value of the program's human health and environmental benefits in the year 2010 to be $122 billion annually. Most of these benefits result from the prevention of health-related impacts, such as premature deaths and illnesses and workdays missed due to illness, but they also include improved visibility in parks and other recreational and ecosystem improvements.

Does anyone have the citation for this paper?

Update: here is a link to the forthcoming paper. The reference and abstract are below.

A fresh look at the benefits and costs of the US acid rain program

Journal of Environmental Management

Lauraine G. Chestnut,  and David M. Mills

Stratus Consulting Inc., P.O. Box 4059, Boulder, CO 80306-4059, USA

Received 1 October 2004;  revised 18 May 2005;  accepted 19 May 2005.  Available online 19 September 2005.

Abstract
The US Acid Rain Program (Title IV of the 1990 Clean Air Act Amendments) has achieved substantial reductions in emissions of sulfur dioxide (SO2) and nitrogen oxides (NOx) from power plants in the United States. We compare new estimates of the benefits and costs of Title IV to those made in 1990. Important changes in our understanding of and ability to quantify the benefits of Title IV have occurred. Benefits to human health now take a much higher profile because the contribution of SO2 and NOx emissions to the formation of fine particulate (PM2.5) is substantial, and evidence of the harmful human health effects of PM2.5 has emerged in the last 15 years. New estimates of the health benefits of PM2.5 reductions are the largest category of quantified health and environmental benefits and total over US$100 billion annually for 2010 when the program is expected to be fully implemented. Although important uncertainties exist in any specific estimate of the benefits, even if the estimates were calculated using more limiting assumptions and interpretations of the literature they would still substantially exceed the costs. Estimates of annualized costs for 2010 are about US$3 billion, which is less than half of what was estimated in 1990. Research since 1990 also suggests that environmental problems associated with acid deposition and nitrogen deposition are more challenging to resolve than originally thought and will require larger reductions in emissions to reverse. The greater than expected benefits to human health, the greater vulnerability of natural resources and ecosystems, and the lower than expected costs all point to the conclusion that further reductions in SO2 and NOx emissions from power plants beyond those currently required by Title IV are warranted.

A cost estimate of electric utility regulation

The C-J (LG&E exces say rates could climb ...):

The Obama administration’s new environmental proposals could drive up LG&E and Kentucky Utilities electricity rates 20 percent by 2019, the companies’ top executive warned Thursday.

The U.S. Environmental Protection Agency is asking the utility industry to do too much, too fast and would force the two utilities to spend $4 billion in compliance costs over 10 years, said Vic Staffieri, chief executive officer of E.On U.S., parent of LG&E and Kentucky Utilities, at the Governor’s Conference on the Environment held in Louisville. E.On is being acquired by Pennsylvania-based PPL. ...

The new or anticipated rules include tighter restrictions on such air pollutants as ozone, mercury, sulfur dioxide, fine particles, and nitrogen dioxide. They also include a rule to limit the movement of power plant pollution from state to state.

And the EPA is weighing its first regulations on managing coal-burning wastes — the ash and scrubber sludge left over after coal is burned and cleaned of some pollutants.

[Louisville Gas and Electric executive] Steffieri said managing coal wastes could cost as much as $700 million over ten years.

>He said the $4 billion compliance estimate does not take into account potential future costs of complying with climate-change rules that would limit carbon dioxide.

A good guess is that this cost estimate is too high. The regulated may exxagerate cost estimates or give worst case scenarios and people are clever:

But Sarah Lynn Cunningham, a Louisville environmental engineer, said in a telephone interview that industry has a long history of inflating initial cost estimates for complying with environmental rules. Often, that’s because companies need to develop new technology, and “once they get in there, they figure out ways to do it cheaper,” she said. ...

And:

Kentucky residents should also consider the health and economic benefits of cleaner air, said [Frank] O’Donnell, president of Clean Air Watch in Washington, D.C.

“Studies have shown that literally hundreds of people in Kentucky are dying prematurely every year from dirty coal pollution, and hundreds of others end up in the hospital,” he said.

Waxing nostalgic

I'm in Kentucky helping my mom clear out her house as she has moved into assisted living. So that might explain this, this and this.

On Saturday I head down to the alma mater for my 25th reunion (Centre-Millsaps) and then to the Kentucky-Georgia game that night. I'm sure there will be more waxing. I ask for your forgiveness in advance.

Intermediate Micro

Intermediate Macro