Environmental Economics

PBR Me ASAP

Results from the 2012 Great American Beer Festival:

Category: 33 American-Style Lager, Light Lager or Premium Lager, 51 Entries
Gold: Pabst Blue Ribbon, Pabst Brewing Co., Los Angeles, CA
Silver: Miller Lite, Miller Brewing Co., Milwaukee, WI
Bronze: Keystone Light, Coors Brewing Co., Golden, CO

What?

Living in Ohio it's often more about quantity than quality.

An editor's prerogative

From the inbox:

I now have two referee reports on your submission to the [journal name redacted] of “[title redacted]". One referee recommends acceptance as is (though that report has little content) while the other recommends a revise and resubmit, raising some concerns. I have read the paper carefully myself and, unfortunately, the concerns raised by the second referee (plus others of my own) loom larger than for me than for either of the referees. Based on this, I have decided to reject the paper.

Prerogative: The exclusive right and power to command, decide, rule, or judge.

My (economist) answer to the gas price question from last night's debate

In last night's townhall presidential debate, the second question asked from the audience was:

Your energy secretary, Steven Chu, has now been on record three times stating it's not policy of his department to help lower gas prices. Do you agree with Secretary Chu that this is not the job of the Energy Department?

Both candidates answered with typical nonsense standard talking points that effectively avoided the question. Here is how I would have answered:

The role of the government is not to judge whether prices are too high or too low and then arbitrarily try to lower or raise them based on our opinion.  The role of the government in markets is twofold: 1) ensure that markets are operating efficiently and 2) ensure that all citizens are able maintain a minimum standard of living so that they may actively participate in those effficently working markets. 

With regard to the first point, prices contain signals.  The governments role is to ensure that the policies in place allow markets to effectively adjust so as to reflect the right signals, the signals that maximize the well-being of society as a whole.  If the market is operating in such a way that the signals provided by the prices reflect a misallocation of society's scarce resources, then absolutely the government has a role in establishing policies that correct the failure of the market to do its job.  But if the market is accurately reflecting the full costs and benefits of all production and consumption decisions, then the government needs to step aside and let the prices signal what they need to signal.

As to the second point, the ability of citizens to maintain a minimum standard of living is obviously subjective and depends on how you define 'fair.'  This is where me and my opponent differ.  The problem with trying to establish a 'fair' set of prices is that the definition of fair depends on who you ask.

Do I support equal access to economic opportunity by all? 

Absolutely. 

Do I support artificial manipulation of prices to achieve that goal? 

Absolutely not.

Somehow I don't think I will ever be president.

 

 

 

We're a "Top 50 Alternative Energy Blog"

In case you missed it:

Alternative energy has been a hot topic in recent years, as it has been heavily debated in both the political and investing world. Some feel that America’s energy independence relies on the expanded use of alternative sources, while others disagree with that sentiment. Either way, alternative energy investing has surged in popularity in recent years as many have added long term exposure to their portfolios in hopes of this asset class growing as a whole. But investing in green energy can be a tall order, as there are numerous companies that offer dozens of different clean energy solutions [for more alternative energy news and analysis subscribe to our free newsletter]. 

In an effort to better help our readers choose the right alternative energy investment for them, we outline the top 50 alternative energy blogs (in no particular order) to help you make the best choices for your portfolio.

via commodityhq.com

Environmental Economics is included in the "News" category: "These resources are dedicated to bringing you breaking news and updates..."

Environmental and Urban Economics is in the "General" category: "The following blogs broadly discuss the alt energy world..."

We've definitely become short on "discussion." Maybe it is that part-time administrator thing?

Who says administration gets in the way of research*?

From the inbox:

I am pleased to accept your paper...“Inattention to Search Costs in the Gasoline Retail Market: Evidence from a Choice Experiment on Consumer Willingness to Search”...I believe it makes an interesting contribution to understanding consumer fuel purchase behavior. To increase the potential impact of your paper and the Journal, if you have a copy of this paper posted on-line please note on it that it is now forthcoming in the American Journal of Agricultural Economics.

OK, here's the citation and link to a slightly older version of the paper:

Castilla, Carolina and Haab, Timothy C., Inattention to Search Costs in the Gasoline Retail Market: Evidence from a Choice Experiment on Consumer Willingness to Search.  Forthcoming American Journal of Agricultural Economics.

*Congratulations to my advisee (and lead author) and assistant professor of economics at Colgate, Carolina Castilla.

Is Luhvul a climatopolis?

Even flyover cities have read Matt Kahn's book:

Whether it’s an example of climate change or just temperamental Mother Nature, the evidence of more extreme weather is mounting in Louisville and across the nation. And city officials and business leaders are taking their first steps to prepare for what some scientists predict could be even dodgier consequences ahead. 

That includes identifying some of the weather threats, ramping up the emergency-response system, buying out some residents of flood-prone areas, introducing green infrastructure such as plant-covered roofs, and launching an effort to cool the city by restoring the vastly depleted tree canopy.

And a new, long-range planning effort called Vision Louisville will attempt to factor in climate change, city officials said.

Much of that work is being done without direct reference to global warming.

via www.courier-journal.com

Note: Taking a cue from the nation, much of my future work will be done without direct reference to global warming.

 

An obligatory Nobel Prize post

Catherine Rampell:

Two Americans, Alvin E. Roth and Lloyd Shapley, were awarded the Nobel Memorial Prize in Economic Science on Monday for their work on market design and matching theory, which relate to how people and companies find and select one another in everything from marriage to school choice to jobs to organ donations.

Their work primarily relates to markets that do not have prices, or at least have strict constraints on prices. In classical economics, prices are the main mechanism through which resources are allocated. The laureates’ breakthroughs involve figuring out how to properly assign people and things to stable matches when prices are not available to help buyers and sellers pair up.

via www.nytimes.com

In searching for some connection to environmental economics, the closest thing I can find is that Dr. Roth has also conducted a Zoomerang survey, which should make my November SEA "multi-method survey" presentation go much smoother:

Internet surveys are an emerging methodology compared to telephone surveys. Research describing their relative performance is still developing. Initial studies suggest internet surveys do not introduce additional biases compared to random digit phone surveys. Internet surveys often yield response rates of less than 10% (20), and as low as 2% (21,22). While nonresponse bias is always a concern, research suggests that low response rates do not necessarily indicate nonresponse bias (22,23).

Another grand experiment

Most of the article focuses on the issue of verification of offsets (e.g., tree counters), but more interesting is simple fact that California's cap and trade policy is actually kicking off:

On Jan. 1, [California] will become the first state in the nation to charge industries across the economy for the greenhouse gases they emit. Under the system, known as “cap and trade,” the state will set an overall ceiling on those emissions and assign allowable emission amounts for individual polluters. A portion of these so-called allowances will be allocated to utilities, manufacturers and others; the remainder will be auctioned off.

Over time, the number of allowances issued by the state will be reduced, which should force a reduction in emissions.

To obtain the allowances needed to account for their emissions, companies can buy them at auction or on the carbon market. They can secure offset credits, as they are known, either by buying leftover allowances from emitters that have met their targets or by purchasing them from projects that remove carbon dioxide or other greenhouse gases from the atmosphere, ...

The outsize goals of California’s new law, known as A.B. 32, are to lower California’s emissions to what they were in 1990 by 2020 — a reduction of roughly 30 percent — and, more broadly, to show that the system works and can be replicated.

The risks for California are enormous. Opponents and supporters alike worry that the program could hurt the state’s fragile economy by driving out refineries, cement makers, glass factories and other businesses. Some are concerned that companies will find a way to outmaneuver the system, causing the state to fall short of its emission reduction targets.

“The worst possible thing to happen is if it fails,” said Robert N. Stavins, a Harvard economist.

via www.nytimes.com

Maybe I shouldn't worry so much about the wording of survey questions on the sidebar of webpages?

Here are the results of the poll in the sidebar of the article mentioned in this post:

I voted "Yes, through a cap-and-trade system." At this point I'm not really sure why I prefer cap-and-trade other than more practical stuff. It seems like cap-and-trade is better at regulating quantity than a tax. I used to think it is politically more viable (not anymore, I guess) which isn't a great reason. Another reasons is that a U.S. market could be integrated with the European and other carbon markets. Still another is that I like reading Stavins and he is the #1 proponent of cap-and-trade. Is this a good reason? creating markets is preferred to a government tax? On the other hand, the U.S. seems to need a source of revenue and more is likely to be generated with a carbon tax than cap-and-trade (since all permits are not likely to be auctioned). I'm sure all of these reasons fly in the face of the face of the theory developed by my economics colleagues. All I can say to that is sorry, I can no longer follow your math. 

Regardless of all that, why was I required to choose between cap-and-trade and a carbon tax? I would have preferred to provide an answer that indicated I preferred economic incentives; i.e., either cap-and-trade or a carbon tax would be fine as long as we attempt to address climate change efficiently.

I don't see why people push this false dichotomy (here is more on that issue). At one point I got so upset that I conducted my own short survey with subjects (n>400), mostly economists, recruited from this blog and the RESECON listserv. Here is the link to the survey but I can't find the post that reported the results (dang!). So, giddyup again.

These results reflect my own views fairly well. 

Economists prefer economic incentive-based policy:

Economists prefer a carbon tax over cap-and-trade:

This preference is not all that strong:

MR: Handicapping the 2012 Nobel

Tyler Cowen:

This article mentions Alvin Roth, Bob Shiller, Richard Thaler, Robert Barro, Lars Hansen, Anthony Atkinson, Angus Deaton, Jean Tirole, Stephen Ross, and William Nordhaus.

I’ll predict a triple prize to Shiller, Thaler, and Eugene Fama.  Fama clearly deserves it, can’t win it solo (too strongly EMH in an age of financial crisis), but can be bundled with two people from behavioral finance and irrational exuberance theories. ...

Tirole and Nordhaus are deserving perennials, with various bundlings (e.g., Oliver Hart, or for Nordhaus other names in environmental). ...

via marginalrevolution.com

I'll predict Nordhaus. After all, he won the AERE Publication of Enduring Quality Award, a well-known pre-Nobel.