Environmental Economics

Who am I to clarify Econbrowser? but ...

In a post with four policy suggestions that create jobs, James Hamilton's fourth is "Apply sensible cost-benefit analysis":

Here's a report from ABC news:

The sand dune lizard is a small reptile that has become the scourge of the Texas Oil industry, not because it is dangerous but because the threatened species could put land ripe for oil exploration off limits.

"As far as I am concerned, it is Godzilla," Texas land commissioner Jerry Paterson told ABC News. "[It's] the biggest threat facing the oil business in memory," said Ben Shepperd, president of the Permian Basin Petroleum Association. They believe the small tan-colored, insectivorous lizard could cost the oil industry and surrounding communities thousands of jobs....

The federal government said the sand lizard is on the verge of extinction, and is expected to place it on the endangered species list soon. If the species makes the list, its 800,000 acre habitat in the shinnery oak sand dune communities of southeastern New Mexico and southwestern Texas would receive protected status. That habitat happens to be right in the heart of Texas oil country.

Granted, the employment benefits possible from following the suggestions above would be a drop in the bucket as far as the millions of Americans still needing work. But I think they illustrate the possible benefits of a sweeping directive from the President to all administrative agencies that jobs really do come first.

I can't agree more about correctly estimating costs and benefits, but jobs are costs of projects, not benefits. See here and here and here and here (and check out this one where I make the jobs and benefits mistake ... my own thinking has become clarified since 2005).

Storage Wars and a classroom auction game

If you are looking for a televised example of an unknown common values auction:

A&E presents the new original real-life series “Storage Wars,” which follows four professional buyers and their teams as they scour repossessed storage units in search of hidden treasure. Part gamblers, part detectives, these seasoned veterans have found everything from coffins to the world’s most valuable comic book collection, paying as little as ten dollars for items valued in the millions.

In Storage Wars the value of each of the bidders is a function of their own tastes and the value of others (and the goofy bidding games they play). The true value of the storage locker is revealed after the auction when the winning bidder takes the items to be appraised.

And note: Today is my last day of teaching MBA managerial economics! I'm going to try to simulate some auction theory using a couple of decks of playing cards with the face cards taken out.

1. Each student gets a card and it is defined as their private value. We'll proceed through English, First Price, Second Price and English auctions and observe bidding behavior and revenues.
2. Next, to demonstrate an unknown common value auction (e.g., storage wars, oil and gas drilling rights) each student will be told that the value on the card is their estimate of the true value of the item. The common true value of the item will be drawn randomly from another deck of cards with the exact distribution of that passed out in class (at least, almost exact). There is a good chance that the highest bid will be greater than (a) the estimated bid of the winning bidder and (b) the true value of the item.

I'm sure there is a better version of this out there somewhere (but it is what I'm able to come up with in my daily class prep panic); any pointers to something better?

"When I heard about the Big Man’s passing on Saturday night, I was struck with an overwhelming feeling that the days of my youth were now finally over"*

*New Jersey Governor Chris Christie on Clarence Clemons' passing.

Pick your post title: There's a tear in my beer | Another reason to hate Duke | The road less traveled

The solar industry in North Carolina isn't expanding without government help:

Duke Energy, which earns billions from coal and nuclear power, has become sun-splashed North Carolina's biggest source of solar power - and, critics charge, an obstacle to expanding the new industry.

Duke Energy Carolinas ranked 10th-largest among U.S. utilities for the amount of solar energy it brought online last year. That's because of a state law that, for the first time, required North Carolina utilities to make a smidgen of their electricity from the sun.

That law, combined with state tax credits, ignited the solar industry. North Carolina leaped from the bottom 10 solar-producing states five years ago to 11th-largest now. ...

I don't really get the complaints being made against Duke here, other than the utility would rather not be required to produce higher cost energy.

Both Duke and Progress fought state legislation this year that would have doubled the solar mandate - to 0.4 percent of their total output - by 2018.

Increasing the solar goal, Duke says, would be unfair to developers of other forms of renewable energy. Solar developers, on their own, are already finding ways to cut costs to compete with forms such as wind and biomass, Smith said.

Insert snark here.

Passage of the bill, and a second failed measure to allow renewable-energy developers to sell power directly to facilities, would have created 8,350 jobs by 2015, the sustainable energy group estimates. North Carolina solar businesses employed about 1,350 people last year, it says.

Here is a reminder about the green jobs mistake.

Boosting the target "is essential because we've maxed out demand under the current regime," said Richard Harkrader of Durham's Carolina Solar Energy, a former policy chairman for the association.

"Companies like mine are going out of state. We're not hiring anymore. I don't know how some of the smaller companies are going to survive."

The bottom line is that the solar industry is seeking old-fashioned government help. The conversation has taken the "jobs fork in the road" when it should have taken the "air quality" fork."

Right on

From the Chronicle of Higher Ed, here are a couple of tips for professors using social media.

Under the "Don't be creepy" heading:

Some professors use only one Facebook page but wrestle with how open to make that information. One of the most-discussed questions about social networking on campuses is whether or not professors should "friend" their students on Facebook. Mr. Brady's policy on the issue is one I've heard from many professors: He will accept a friend request from any student, but he never makes the first move. "I think it's a little creepy when the old guy asks his students, Will you be my friend?," he told me.

But some personal stuff is OK:

There may be a benefit to that kind of sharing. Ms. Johnson recently conducted a survey of 120 students at the college about what they thought of a series of Twitter feeds run by professors. The majority of students found the professors who mixed in personal details with their down-to-business tweets more credible—rating them higher on measures of competence, trustworthiness, and caring. Her theory: Students want to end the semester with a connection to their professors, not just a head full of facts.

Both Ms. Johnson and Mr. Brady acknowledge that there are topics they avoid on their Facebook pages and Twitter feeds, knowing that bosses and students might see. ...

via chronicle.com

New working paper

Available at EconPapers:

A Revealed and Stated Preference Latent Class Model to Examine Homogenous Subgroup Consumer Behavior Responses to Information and Food Safety Technology Treatments

Ash Morgan, John C. Whitehead, William L. Huth, Gregory S. Martin and Richard Sjolander

No 11-05, Working Papers from Department of Economics, Appalachian State University

Abstract: The combination and joint estimation of revealed and stated preference (RP/SP) data approach to examining consumer preferences to relevant policy-based measures has exclusively considered aggregate data and behavior of the average individual. However, in policy-based analyses, where the research is often driven by understanding how different individuals react to different or similar scenarios, a preferred approach would be to analyze preferences of homogenous population subgroups. We accomplish this by developing a latent class RP/SP analysis that examines whether homogenous subgroups (or classes) of the population, based on individual health and behavioral characteristics, respond differently to health-risk information and new food safety technology. The ongoing efforts by the U.S. Food and Drug Administration to reduce illness and death associated with consuming raw Gulf of Mexico oysters provide an ideal platform for the analysis as the health risks only relate to a very specific subgroup of consumer. Results from the probabilistic latent class model indicate that the vulnerable at-risk consumers respond differently to the information treatments than other subgroups, illustrating why educational information brochures have had little impact on reducing annual deaths from consuming raw oysters. Also, findings across all subgroups provide strong empirical evidence that the new FDA policy requiring processing technology to be used in oyster production will have detrimental effects on the oyster industry.

Key Words: Food safety technology, health-risk information, latent class analysis, revealed preference, stated preference

 

Whither environmental federalism?

The U.S. Supreme Court handed American Electric Power a victory yesterday when it ruled that states cannot go to federal court to force power companies to reduce the emission of greenhouse gases believed to cause global warming.

In an 8-0 ruling, the justices concluded that the U.S. Environmental Protection Agency has the primary authority to regulate emission of greenhouse gases. By doing so, the justices tossed out a lawsuit brought by eight states against AEP, three other private power companies and the Tennessee Valley Authority.

The decision means that AEP will not have to spend millions of dollars defending itself from state challenges in federal courts. The states had wanted a federal judge to force the power companies to slash their emissions of greenhouse gases.

But at the same time, the decision provides the EPA with a boost for its desire to issue new regulations to restrict emissions from coal-fired utility plants operated by AEP and other companies.

via www.dispatch.com

Taking the college out of college football

It sounds like there is trouble at UMass and this is just the athletic part:

In an effort to raise Amherst's national profile, Mr. Holub has banked on big-time college football. The university announced this spring that its football team would move to the NCAA's top competitive level, joining the Mid-American Conference.

Unlike many of the colleges to which Amherst hopes to be favorably compared, for which Saturday football games are interwoven with college life and the alumni experience, Amherst will play its games some 100 miles east of the campus. The opportunity to play at Gillette Stadium, where the New England Patriots compete, will provide Amherst with a ready-made facility of professional caliber. At the same time, however, it will divorce the campus from events that are designed in part to promote student loyalty and a stronger sense of community.

via chronicle.com

I wonder if they plan to raise student fees to fund the off-off-campus team that students won't be able to see play?

I also always wonder why universities are constantly striving to move up to the next rung on the academic ladder (I don't really wonder ... this is the game for upper administrators). Most would be better served to try to improve performance on their current mission.

Be careful what you wish for

Q: Besides driving less, what can cause gas prices to fall?

A: The collapse of a national economy and/or another recession

Andy Lipow, president of Lipow Oil Associates, said gasoline could fall as much as another $0.10 a gallon nationally by July 4, but after that, the situation is uncertain. "We could see further declines, but I think that's heavily dependent on how the situation in Greece pans out and affects the value of the euro to the dollar," he said.

He and [Tom Kloza, chief oil analyst at OPIS] said if Greece were to default, Brent [crude oil] would immediately drop because of the potential ripples across Europe's economy. "If you're hoping for $2.50 to $2.75 gas prices, you probably don't realize it, but you're hoping for a recession," said Kozla.

via www.cnbc.com

Env-Econ 101: Then keep raising the prices

Millions of barrels of salty, toxic wastewater from natural-gas wells in Pennsylvania are coming into Ohio despite efforts to keep it at bay.

In June 2010, Ohio quadrupled the fees that out-of-state haulers must pay to dump brine into 170 disposal wells.

Ohio officials thought that raising the fees from 5 cents to 20 cents per barrel would help keep the brine in Pennsylvania, where drilling has exploded since the discovery of huge gas deposits deep in Marcellus shale. Ohio wants to keep its injection wells open for Ohio brine, which also might explode in volume if the state's own shale begins to give up natural gas.

via www.dispatch.com