Environmental Economics

I'm just humbled to be nominated (and arrogant enough to believe I contribute)

On Wednesday, Louis Zacharilla, co-founder of the Intelligent Community Forum (ICF), announced the organization's seven finalists for the 2013 Intelligent Community of the Year. The announcement was made during the final day of the Pacific Telecommunications Council's annual meeting in Honolulu.

The seven finalists -- Columbus, Ohio; Oulu, Finland; Stratford, Canada; Taichung City, Taiwan; Tallinn, Estonia; Taoyuan County, Taiwan; and Toronto, Canada -- "provide a model of 21st Century economic and social development, using information and communications technology to power growth, address social challenges and preserve and promote culture," said an ICF statement. Two other U.S. cities -- Mitchell, S.D.; and Philadelphia -- were also in contention for top seven.

Zacharilla says the perception of Columbus, Ohio, and the new reality are very different. "The perception is Ohio is in the industrial rust belt, largely irrelevant, not really doing much, living on old foundry fumes. That's not at all the case," he said. "It is a very hip city, and their incubator, TechColumbus, is literally putting out all kinds of new businesses." In addition, said Zacharilla, the city has effectively reversed "brain drain," so highly trained and intelligent people stay in the area versus move elsewhere.

Columbus has a net in-migration of new people for the first time in decades. "They have created 29,000 jobs in the last two years," he said, "You don't associate Ohio with creating jobs at that rate. I believe that as Ohio goes, so goes the nation, and the good news is that Columbus is going pretty well."

via www.digitalcommunities.com

I'm going to splurge on an expensive meal!

Stephen Dubner:

Our latest Freakonomics Radio on Marketplace podcast is called “Introducing ‘Freakonomics Experiments.’” ...

In it, Steve Levitt tells Kai Ryssdal about a new website we’ve just launched that will help you make tough decisions in life while also taking part in academic research. And there’s Freakonomics swag to be had, too.

via www.freakonomics.com

I've signed up, got help with a decision and took a survey. Here is the first email I received:

Dear John Whitehead,

You just flipped a coin as a part of Freakonomics Experiments to answer your question Should I splurge on an expensive meal? The coin came up heads—or that you should splurge on an expensive meal. We know that this is a big decision, and we’ll leave you alone over the next two months as you take this step.

In about two months, we’ll check in with you to see how you’re doing. At that time, we’ll send you a link with a short follow-up survey, and we’ll give you another chance to win some more Freakonomics prizes.

We’re so glad you are a member of the Freakonomics Experiments team!

Freakonomics Experiments

I decided not to let the flip of a coin determine if I should grow a mustache.

"Northeast Faces Stark Choice on Climate Pollution"

From an op-ed in the New York Times:

EIGHT years ago, a bipartisan coalition of Northeast and mid-Atlantic governors joined forces to reduce pollution from electric power plants. They agreed to cap overall emissions of carbon dioxide, the major pollutant driving global warming, and require the more than 200 power plants in the region to buy permits to emit the greenhouse gas.

The governors reasoned that plant operators would have an incentive to clean up their emissions if they had to pay for the carbon dioxide they discharged. Over the first three years of the Regional Greenhouse Gas Initiative, average annual emissions were indeed 23 percent less than in the previous three years, and auctions of allowances — or permits to pollute — raised $952 million, much of which has been invested in clean energy programs.

But the future effectiveness of this market-based cap-and-trade system, the first but not the only one of its kind in the nation, is now in question. The nine states in the initiative are preparing to reset the emissions cap — or the total amount of carbon dioxide that power plants can emit — and some of the proposals would allow power plants to increase the amount of carbon dioxide they dump into the atmosphere.

Cap-and-trade programs are designed to lower emissions gradually by reducing the cap and the allowances that are available. Polluters get flexibility in cutting emissions by being able to trade allowances among themselves. The idea is to achieve the reductions at the lowest cost through market forces rather than through direct regulation.

But of the four cap-adjustment proposals under consideration, three would reset the cap above current emissions and allow pollution to rise through 2020. Only a fourth option would continue to drive down pollution by resetting the cap at 91 million tons, the current emissions level, and then reducing it by another 2.5 percent a year through 2020.

Opponents of the initiative, known as R.G.G.I., argue that lower-cost natural gas has eliminated the need for the program by reducing the use of dirtier coal and oil. Growing investments in energy efficiency and renewable electricity have also helped to reduce emissions by cutting demand for electricity from power plants that burn fossil fuels.

But those developments don’t argue against R.G.G.I., which determines what electricity generators may not do — namely, discharge unlimited quantities of carbon dioxide into the atmosphere. If market forces deliver emissions reductions cheaper and faster than anticipated, then states should lock in that progress with a binding cap to ensure that emissions don’t rise and that incentives for reducing pollution remain. ...

via www.nytimes.com

A quick post before class ... I think the writers are correct. If the marginal abatement costs fall (and this is what is happening with natural gas prices), then the efficient policy response is to reduce emissions.

Number of "contingent valuation" studies: 1980-2007

Source: Google Scholar, Carson's Bibliography

Update (2/4/13) via Richard Carson:

The main reason for this is that I gave up trying to get "all" of the CV papers and studies after 2000. This is clearly stated on p. 21 of the book. Between 2000 and 2007, the bibliography contains a sizable but decreasing fraction of the published papers and papers presented at major conferences.

It is also the case though that the Google Scholar numbers are somewhat too high. That is because Google Scholar includes papers that only tangentially mention CV and because Google Scholar will include papers on the "valuation of contingent claims", which seems to have become a popular topic in finance. The CV bibliography tried hard to screen these out. It is also worth pointing out that the date feature of Google Scholar tends to report the "latest" date when it tries to merge various version. Many publishers put up electronic versions of previously published articles after 2000. This masked to some degree the fact that bibliography is missing some of the relevant literature before 2000. It is almost complete in early years but as one approached 2000, the literature outside the U.S. was both growing rapidly and hard to track down.

 

Top 25 outlets for contingent valuation papers

From the Carson Bibliography (through 2008):

Journal	Number
Ecological Economics	167
Land Economics	161
Environmental and Resource Economics	145
Journal of Environmental Economics and Management	132
American Journal of Agricultural Economics	113
Journal of Environmental Management	83
Health Economics	74
Water Resources Research	50
Journal of Risk and Uncertainty	48
Applied Economics	44
Journal of Environmental Planning and Management	42
Journal of Agricultural and Resource Economics	26
Applied Economics Letters	23
Journal of Agricultural Economics	23
Journal of Economic Psychology	23
Journal of Health Economics	23
Agricultural and Resource Economics Review	22
Health Policy	22
Resource and Energy Economics	22
Environmental Values	20
Journal of Leisure Research	20
Australian Journal of Agricultural and Resource Econom	19
Journal of Forest Economics	19
Medical Decision Making	19
Social Science and Medicine	19

 

Daily Demand and Supply: But at least we get ethanol*

According to a press release posted Tuesday on the official website of the National Chicken Council in Washington, D.C., the increase in the cost of corn, in tandem with other factors, has resulted in fewer birds produced overall.

“Chicken companies produced about one percent fewer birds last year, due in large part to record high corn and feed prices,” Bill Roenigk, chief economist and market analyst, was quoted as saying. “Corn makes up more than two-thirds of chicken feed and corn prices hit an all-time high in 2012, due to two reasons: last summer’s drought and pressure from a federal government requirement that mandates 40 percent of our corn crop be turned into in the form of ethanol.”

He added, “Simply put, less corn equals higher feed costs, which means fewer birds produced.”

via washington.cbslocal.com

Drought and increased input prices both serve to decrease the supply (shift the supply curve left).  A decrease in supply decreases the equilibrium quantity and increases the equilibrium price--and potentially reduces your enjoyment of the Super Bowl. 

Darn those ethanol mandates and global warming.

*Sarc

An easy way to save 187 million gallons of gas and get healthier too?

I was reading somewhere recently--OK,OK, it was Reader's Digest again--that one way we could save a significant amount of gas is to lose weight.  I don;t remember all of the details, but the logic was simple:  On average, American's weigh about 20 pounds more today than they did 20 years ago.  If we weighed the same as we did 20 years ago, our cars would be carrying aroun less weight and we all know that there is a weight/fuel consumption teade off holding all else equal, a lighter car consumes less fuel). 

So, in true Env-Econ style, I thought I would do some quick, highly stylized, most likely innacurate, back of the envelope calculations--and then leave it to you to rip it apart.

Here we go:

First some data:

• Average weight of a gas-engine car: 4,000 pounds
• Average weight of an American in 2012: 178 pounds (assuming 50/50 men and women).
• Average weight of an Ameican in 1990: 158 pounds. ("Both figures are nearly 20 pounds higher than the average that men and women reported in 1990")
• Fuel consumption reduction for a reduction in weight: 2-4% reduction in fuel consumption for every 10% redcution in vehicle weight--we will assume 3%.
• Average fuel consumption in U.S.: 8.5 million barrels per day (357 million gallons @ 42 gallons per barrel)
• Average fuel consumption In U.S.: 130,305,000,000 gallons per year (357 million x 365 days/year).

Now for some calculations:

A 20 pound decrease in vehicle+driver weight from 4,178 pounds to 4,158 pounds is a 0.4786979% decrease in vehicle weight. 

If for every 10% decrease in vehicle weight, fuel consumption decreases by 3%, then that 0.4786979% decrease in vehicle weight will result in a 0.14360937% decrease in gasoline consumption. 

Given gas consumption of 130,305,000,000 gallons per year, that 20 pound reduction in average weight will result in a savings of 187,130,190 gallons of gasoline per year. 

At an average price of $3.50 per gallon, losing an average of 20 pounds will save $654,955,665 per year--or $2.73 for every adult in the U.S. per year.

Enough to buy a non-fat, no-whip, skinny mocha latte--you know, to keep the weight off.

 

 

What does the public think about climate change?

Nate Silver:

Inaugural speeches are often criticized as long on rhetoric and short on substance. But President Obama’s second inaugural address on Monday was surprisingly specific about his second-term goals.

Mr. Obama devoted an entire paragraph to climate change and energy, and later in the speech he pointed to several public policy issues where “our journey is not complete,” he said.

Polls show that the president has at least a slim majority of Americans in his corner on almost all of the issues he highlighted. ...

The PollingReport.com database includes two polls on global warming conducted after the Nov. 6 presidential election. An Associated Press-GfK poll in the field from Nov. 29 to Dec. 3 found that 78 percent of respondents said they believed the planet had warmed over the past 100 years, and 49 percent said they thought global warming would be a “very serious” problem for the United States if left unaddressed (31 percent said they thought it would be “somewhat serious”).

Fifty-seven percent of the 1,002 adults surveyed said the United States government should do “a great deal” or “quite a bit” on global warming.

A United Technologies/National Journal Congressional Connection poll conducted Nov. 8 to 11 found that 57 percent of adults said they thought global warming was increasing the likelihood of storms like Hurricane Sandy.

Only about a Gheorghe Mureșan in between

The blades reach 492 feet into the air and the planes fly 500 feet above the ground:

The nation’s largest independent wind farm developer said Friday that it has abandoned its original plans for a 49-turbine project in Eastern North Carolina.

Chicago-based Invenergy’s reconsideration of its proposed Pantego Wind Energy project comes after months of delays caused by risks that would be deal-breakers for just about any wind farm.

The Pantego project’s spinning blades pose a potential threat to bald eagles roosting and foraging in Beaufort County, and they would create a collision risk for F-15E Strike Eagle fighter jets making practice runs from nearby Seymour Johnson Air Force Base. ...

Invenergy proposed the Pantego project in September 2011, with operations set to get under way in December 2012. The wind farm was approved by the N.C. Utilities Commission in March 2012 but quickly ran into trouble with the U.S. Fish and Wildlife Service and the military.

No major wind farm proposed in North Carolina has reached construction despite the fact that the state has some of the best wind resources along the East Coast.

Preliminary estimates last spring said the Pantego wind farm could kill 3.4 to 20.7 bald eagles a year. In the summer, the military warned that the project could result in pilot deaths. 

via www.newsobserver.com

Standards over incentives in the inaugural address

Dang:

Mr. Obama’s path on global warming is a case study in his evolving sense of the limits of his power and his increased willingness to work around intense conservative opposition rather than seek compromise. After coming to office four years ago on a pledge to heal the planet and turn back the rise of the seas, he is proceeding cautiously this time, Democrats said, intent on making sure his approach is vetted politically, economically and technologically so as not to risk missing what many environmental advocates say could be the last best chance for years to address the problem.

The centerpiece will be action by the Environmental Protection Agency to clamp down further on emissions from coal-burning power plants under regulations still being drafted — and likely to draw legal challenges.

The administration plans to supplement that step by adopting new energy efficiency standards for home appliances and buildings, a seemingly small advance that can have a substantial impact by reducing demand for electricity. Those standards would echo the sharp increase in fuel economy that the administration required from automakers in the first term.

via www.nytimes.com