Environmental Economics

Resource and Energy Economics is a fine journal

And, yes, I signed up for the table of contents alerts but, no, I don't need to get the volume 34, number 4 email three times today ... unless the papers in this issue are really awesome.

Finally, an accurate depiction of an economist on TV

This reminds me of a time not long after I got my PhD.  I was golfing with my father and a group of his friends when one of them asked me, 'What do you do?"  My father quickly jumped in and said "He has a a PhD in economics.  But don't ask him what the stock market is going to do.  He has no clue."

A black swan paper?

Environmental economics in the AER:

A Rational Expectations Approach to Hedonic Price Regressions with Time-Varying Unobserved Product Attributes: The Price of Pollution
Patrick Bajari, Jane Cooley Fruehwirth, Kyoo il Kim and Christopher Timmins

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Article Citation Bajari, Patrick, Jane Cooley Fruehwirth, Kyoo il Kim, and Christopher Timmins. 2012. "A Rational Expectations Approach to Hedonic Price Regressions with Time-Varying Unobserved Product Attributes: The Price of Pollution." American Economic Review, 102(5): 1898–1926.
DOI:10.1257/aer.102.5.1898

Abstract We propose a new strategy for a pervasive problem in the hedonics literature: recovering hedonic prices in the presence of time-varying correlated unobservables. Our approach relies on an assumption about home buyer rationality, under which prior sales prices can be used to control for time-varying unobservable attributes of the house or neighborhood. Using housing transactions data from California's Bay Area between 1990 and 2006, we apply our estimator to recover marginal willingness to pay for reductions in three of the EPA's "criteria" air pollutants. Our findings suggest that ignoring bias from time-varying correlated unobservables considerably understates the benefits of a pollution reduction policy. (JEL D12, D84, Q53, Q58, R21)

via www.aeaweb.org

The Price of Fame

Here is an outline of how the academic peer-reviewed publication process works (at least in my experience):

1. Spend a couple of years collecting data, developing models, reading literature, talking with co-authors, procrastinating, complaining you are busy, writing, re-writing, questioning, doubting, and eventually producing a working paper.
2. Spend another year honing, revising, questioning, doubting, rewriting, downplaying significance, motivating co-authors*, complaining, wondering, forgetting to meet deadlines, procrastinating and eventually deciding the working paper is submission worthy.
3. Submit the paper to a journal. 
4. Spend 6 months waiting, wondering, forgetting, working, teaching, writing (another paper), doubting, anticipating mediocre reviews from uninterested, distracted, unmotivated, unincentivized** reviewers.
5. Receive mediocre reviews from uninterested, distracted, unmotivated, unincentivized reviewers along with a polite, unsubtle rejection letter from a slightly more interested, slightly less distracted, slightly more motivated, slightly more incentivized editor.
6. Kick the dog***.
7. Repeat steps 3 and 4.
8. Receive optimistic reviews from different but still uninterested, distracted, unmotivated, unincentivized reviewers.
9. Discard any modicum of integrity, compromise your beliefs, your standards, your norms and spend 3 months revising the paper to address any and all comments from the different but still uninterested, distracted, unmotivated, unincentivized reviewers.
10. Resubmit the paper to the journal is step 7 and spend another 6 months waiting, wondering, forgetting, working, teaching, writing (another paper), doubting, anticipating rubber-stamp positive reviews from the different but still uninterested, distracted, unmotivated, unincentivized reviewers.
11. Receive an acceptance letter from the editor with instructions on how to follow a nonstandard set of guidelines for formatting your paper for final publication.
12. Spend 10 minutes revising your curriculum vitae to list the paper as forthcoming,
13. Spend 3 months procrastinating, revising, adding periods (and commas, parentheses, volume numbers, etc) to your bibliographic citations.
14. Resubmit the final version of the paper.
15. Spend 2 months awaiting receipt of the copyright agreements, signing over most (all?) rights to your intellectual property to the journal.
16. Spend another 2 months waiting for galley proofs of your article.
17. Receive the galley proofs along with notification that the publisher is on a tight publication schedule and all galley proofs must be  checked thoroughly, completely and dramatically within 12 hours of receipt of the galleys (OK, that's an exaggeration.  They usually give you 2 days).
18. Submit the galley proofs on time three weeks late.
19. Wait another 3 months for final notification of a publication date which is 1 year hence.
20. Open your inbox on a Monday morning to the following notification that you are in the final stages of the rewarding academic publication process:

To: Timothy Haab ([email protected])

The Ohio State University

From: <redacted journal name>

Please remit US$373.75, which is 25% of the page charges incurred for your article with <three redacted co-authors names> entitled <redacted title> which appears in <redacted journal name>.

Ah, the glory.

*I am not the motivator.  I am usually the one who needs to be motivated.

**Is that a word?

***That's a metaphor people, sheesh.

You had me at hello

From the inbox:

Dear Professor John Whitehead,

I am writing this email, on behalf of my co-authors, for asking if the
data set available at <http://www.appstate.edu/~whiteheadjc/research/data/ap/> can be used for illustrative examples in a chapter of our book regarding non-market
valuation methods.

The book is entitled "Measurement of Individual Stated Preferences Using
R", which scheduled to be published next year as a volume of Chapman &
Hall/CRC Press: The R Series. The tentative bibliographic information is
available, for instance, at
<http://www.amazon.co.uk/Measurement-Individual-Stated-Preferences-Using/...>.

The chapter deals with practical issues in the contingent valuation method (CVM). Among other things, we would like to replicate some of the results reported in existing articles. In addition, we are planning to provide an add-on package for the open-source statistical environment R that includes functionalities for estimating various empirical models
used in CVM studies. The add-on package will be made downloadable for public later.

... the source (the original article) and the acknowledgements will be clearly mentioned in the book or in the help documents of the package.

 

Daily Demand and Supply: What happens when the price of a substitute falls?

Thisprobabhly shouldn't surprise me, but for some reason it did:  Walmart is the leading user/producer of solar energy among corporate users. Why? Because they have a lot of big flat roofs where they can install photovoltaic panels, and prices of solar systems have been decreasing.

Walmart has 115 rooftop solar installations in seven countries. Earlier this month, the company completed its largest solar project yet, installing 14,000 solar panels on a 1 million square-foot distribution center in Buckeye, a small town west of Phoenix. The panels sit atop the roof and parking canopies. The system will provide up to 30 percent of the center’s energy needs, generating enough electricity to power more than 400 homes. The reduction in greenhouse gas emissions is the equivalent of taking about 600 cars off the road.

 

Walmart is also looking to harness the power of the wind, installing micro-wind turbines in parking lots as part of an alternative energy test program.

 

The shift locks down a major contributor to operating costs and the falling cost of solar energy systems makes the economics even more appealing. The average price of a commercial photovoltaic system as dropped nearly 14 percent in the last year, according to the Solar Energy Industries Association. So companies focused on efficiency are more and more likely to look to the sun for a bargain.

via www.mnn.com

Updated: AERE sessions at the 2012 SEA meetings

After a few cancellations, late additions, rearranging the lineup that will go into the printed program has 12 sessions, 48 papers and 0 discussants. Here is the link: http://www.etnpconferences.net/sea/sea2012/User/ProgramSponsorOrgSessions.php?SOID=1#.

The opposite of encouraging news

In coming years, Ohioans likely can count on continued poor employment growth, little in the way of pay increases, and more health-care costs shifted to them.

via www.dispatch.com

A nonzero probability

From the inbox (from a real person):

Did I tell you I often visit your blog on environmental economics? :)

My reply:

... keep reading the blog. There is a slight chance you might find something useful someday!

Why didn't I think of that?

Because I'm not as smart as Dallas Burtraw (The Institutional Blind Spot in Environmental Economics):

Economic approaches are expected to achieve environmental goals at less cost than traditional regulations, but they have yet to find widespread application. One reason is the way these tools interact with existing institutions. The federalist nature of governmental authority assigns to subnational governments much of the implementation of environmental policy and primary authority for planning the infrastructure that affects environmental outcomes. The federalist structure also interacts with the choice of economic instruments; a national emissions cap erodes the additionality of actions by subnational governments. Even the flagship application of sulfur dioxide emissions trading has been outperformed by the venerable Clean Air Act, and greenhouse gas emissions in the United States are on course to be less than they would have been if Congress had frozen emissions with a cap in 2009. The widespread application of economic tools requires a stronger political theory of how they interact with governing institutions.

...

The trading program was statutorily created in the Clean Air Act Amendments of 1990 and led to cost reductions of roughly 40 percent compared to traditional approaches under the Clean Air Act.8 However, the program had what literally became a fatal flaw: namely, an inability to adjust to new scientific or economic information. Though information current in 1990 suggested that benefits of the program would be nearly equal to costs, by 1995 there was strong evidence that benefits were an order of magnitude greater than costs. Today the Environmental Protection Agency would argue that benefits are more than thirty times the costs.Unfortunately, to change the stringency of the program requires an act of Congress, at least according to the D.C. Circuit Court.12 The Act locked in the emissions cap, and despite several legislative initiatives to change the stringency of the trading program, none have been successful.

via www.envirovaluation.org