Environmental Economics

At what point in our history did we decide that federally-funded data COULD be the sole property of the researcher?

This is really good news:

The Obama administration announced on Friday a major new policy aimed at increasing public access to federally financed research. The policy, delivered in a memorandum from John P. Holdren, director of the White House Office of Science and Technology Policy, applies to federal agencies that spend more than $100-million a year to support research and development.

In the memo, Mr. Holdren directed those agencies to develop "clear and coordinated policies" to make the results of research they support publicly available within a year of publication. The new policy also requires scientific data from unclassified, federally supported research to be made available to the public "to search, retrieve, and analyze." Affected agencies have six months to decide how to carry out the policy. ...

It was clear that a number of federal agencies already had preparations under way for how they would observe the new policy. For instance, the National Science Foundation immediately sent out a statement affirming its commitment to the principle of public access, saying it had already established a timetable for consultation and planning. It noted that the "implementation details" were likely to vary by discipline "and that new business models for universities, libraries, publishers, and scholarly and professional societies could emerge."

Friday's announcement capped a lengthy process of consultation with various stakeholders that sought public input on access to federally financed research and data. More than 65,000 people have signed a petition on the White House's We the People Web site calling for free online access to scientific-journal articles based on taxpayer-supported research.

via chronicle.com

My only beef is that the policy is too limited. I don't know what sort of data might still be private, but why limit this to agencies that spend more than $100 million a year?

"The Case for a Higher Gasoline Tax"

Valerie J. Karplus ("a research scientist in the Joint Program on the Science and Policy of Global Change at M.I.T.") in the NYTimes:

... But if our goal is to get Americans to drive less and use more fuel-efficient vehicles, and to reduce air pollution and the emission of greenhouse gases, gas prices need to be even higher. The current federal gasoline tax, 18.4 cents a gallon, has been essentially stable since 1993; in inflation-adjusted terms, it’s fallen by 40 percent since then. ...

In a paper published online this week in the journal Energy Economics, I and other scientists at the Massachusetts Institute of Technology estimate that the new standards will cost the economy on the whole — for the same reduction in gas use — at least six times more than a federal gas tax of roughly 45 cents per dollar of gasoline. That is because a gas tax provides immediate, direct incentives for drivers to reduce gasoline use, while the efficiency standards must squeeze the reduction out of new vehicles only. The new standards also encourage more driving, not less.

via www.nytimes.com

Here is the abstract to the paper:

The United States has adopted fuel economy standards that require increases in the on-road efficiency of new passenger vehicles, with the goal of reducing petroleum use and (more recently) greenhouse gas (GHG) emissions. Understanding the cost and effectiveness of fuel economy standards, alone and in combination with economy-wide policies that constrain GHG emissions, is essential to inform coordinated design of future climate and energy policy. We use a computable general equilibrium model, the MIT Emissions Prediction and Policy Analysis (EPPA) model, to investigate the effect of combining a fuel economy standard with an economy-wide GHG emissions constraint in the United States. First, a fuel economy standard is shown to be at least six to fourteen times less cost effective than a price instrument (fuel tax) when targeting an identical reduction in cumulative gasoline use. Second, when combined with a cap-and-trade (CAT) policy, a binding fuel economy standard increases the cost of meeting the GHG emissions constraint by forcing expensive reductions in passenger vehicle gasoline use, displacing more cost-effective abatement opportunities. Third, the impact of adding a fuel economy standard to the CAT policy depends on the availability and cost of abatement opportunities in transport—if advanced biofuels provide a cost-competitive, low carbon alternative to gasoline, the fuel economy standard does not bind and the use of low carbon fuels in passenger vehicles makes a significantly larger contribution to GHG emissions abatement relative to the case when biofuels are not available. This analysis underscores the potentially large costs of a fuel economy standard relative to alternative policies aimed at reducing petroleum use and GHG emissions. It further emphasizes the need to consider sensitivity to vehicle technology and alternative fuel availability and costs as well as economy-wide responses when forecasting the energy, environmental, and economic outcomes of policy combinations.

If you would like to better understand the difference between environmental standards and taxes, you should buy the Marginal Revoloution textbook:

In Modern Principles, Tyler and I explain that a command and control regulation is a less flexible and thus more expensive way of reducing energy consumption than is a tax.

Because that stuff isn't available for free anywhere in the world :)

Carbon Regulation Watch

"So the EPA, probably in the next few weeks, is probably going to set standards that any new power plant that's built in the U.S. has to achieve a certain carbon dioxide emissions rate per unit of energy produced."

Those likely standards—limiting emissions to 1,000 pounds of CO2 per megawatt hour—virtually eliminate the likelihood new coal-fired power plants will be built.

via www.usnews.com

Defining value: One giant panda at a time

Some insights into values as defined by panda preservation:

Who wouldn’t want to fly across the world and spend a week with giant pandas? They are undeniably cute.

...

Well, I'm assuming a lot of people, since not many people actually do fly across the world to spend a week with giant pandas.  That's the p[oint of revealed preferences.  Actions reveal preferences.  Now I know what you are thinking: I would go if I could afford it!  But that's really the point of understanding economics--you can't afford everything, otherwise everything would be free.  So you make decisions based on your preferences and your constraints: budget and time.  The trade-offs you make among those things you want reveal the relative value you place on those things. 

A new poll with climate change questions

 E2 Wire:

About one-third of people in the United States say action on climate change is "essential" in 2013, according to a USA TODAY/Pew Research Center poll released Thursday.

Thirty-four percent of people in the poll called taking action on climate change “essential this year." Thirty-nine percent said climate change needs to be addressed in the next few years, while 19 percent said nothing should be done and 8 percent had no opinion. 

Republicans who were polled rejected two major options for mitigating climate change. Nearly half opposed setting stronger power plant emissions limits, and only one-third backed using more renewable energy. ...

Sixty-two percent of respondents said Obama should forge ahead with stricter emissions limits on power plants, compared with 28 percent who opposed the idea. ...

Fifty-four percent said the United States should use more renewable sources for energy, compared with 34 percent who wanted to develop more oil and gas. ...

The poll was conducted through telephone interviews — half by landline, half by cellphone. It has a 2.9 percentage point margin of error.

Almost two-thirds want something done about climate change in a few years. It would be best to know how that would change with an explicit cost attached.

"Paying Ecuador to Protect the Rainforest"

Common Resources:

A recent episode of NPR’s Planet Money discussed Ecuador’s proposed solution to a national dilemma: the fact that a massive oil discovery and a national park happen to be in the same place. Ecuador’s proposal is to forswear drilling – but only if other countries donate half the value of the oil in aid (about $3.6 billion). For the show, Planet Money journalist David Kestenbaum interviewed RFF University Fellow and Duke University professor Billy Pizer, formerly Deputy Assistant Secretary for Environment and Energy at the Treasury Department. Here’s how NPR summarized his comments:

“The joke we always used to always talk about was, you know, ‘Give me the money or I’ll shoot the trees,’ . . . Pizer says he’d love to keep the park safe. But he says the proposal worried him as a potential precedent that would encourage other countries to threaten to destroy their own forests unless the world pays up.

The show is worth a listen. But, inevitably, material gets left on the cutting room floor. Here are more of Pizer’s views on the Ecuadorian proposal. 

What makes 'smart' gas price coverage?

Yesterday, I posted this.  Last night I got this:

Hi Tim,

I read with interest this item on the Environmental Economics website…Would like to get your thoughts on what would constitute “smart” gas price coverage…

We struggle with how best to cover gas prices each and every time prices spike!

Regards, Greg Agvent, Director of Planning, CNN

My thoughts on what would constitute 'smart' gas price coverage?

1. Interview me (I didn't send this). 
2. (I sent this) In short, the issue of gas price coverage comes down to one about the 'need to do something' about gas prices. In many cases, gas price fluctuations are the result of natural market forces (it might be changes in world supply, or changes in demand).  Because gas consumption is viewed as a necessity by many, the immediate reaction to rising prices tends to be "do something."  But prices, when adjusting due to market forces, create signals for consumers to make better decisions. For example, if gas prices are kept artificially low, consumption will be kept artificially high.  The problem with doing something about high gas prices is that doing something interferes with the signals that markets are sending.
   
   To get more to your question of what constitutes 'smart' coverage, smart coverage will recognize the differing roles of market forces and policy forces.  Policies to remedy uncomfortable, but natural, market conditions represent bad economics.  Policies to remedy market misallocations are good economics. Politicians 'doing something' to make people complain less, well...

I wonder if I'll hear back?

 

Freakonomics: The Downside of More Miles Per Gallon

Stephen Dubner:

Our latest Freakonomics Radio on Marketplace podcast is called “The Downside of More Miles Per Gallon.” (You can download/subscribe at iTunes, get the RSS feed, listen via the media player above, or read the transcript below.)

The gist: the Federal gas tax is a primary source of infrastructure funding but, politically, it has proven a hard tax to increase. Furthermore, because the tax is a fixed amount (18.4 cents per gallon) rather than a percentage, gas-tax revenues don’t rise even when gas prices do — as has been happening lately.

Even worse, as modern cars travel further on a gallon of gas (good news, right?), they contribute even less money for the roads they travel. And cars are going to get even more fuel-efficient.

So what’s to be done? Some politicians want to get rid of gas taxes in favor of an increased sales tax — which, Eric Morris argues, is a bad idea, since it shifts the burden to non-drivers.

A more promising idea, under exploration in many areas, is to switch to a tax based on how many miles you drive.

via www.freakonomics.com

Here is the link to our (mostly Tim's) posts on a mileage tax.

The BLS will be updating us on green jobs

While unsubscribing to a couple of BLS updates I ran across this:

That's right, green jobs are just as important as mass layoffs and inflation. 

"China Says It May Implement a Carbon Tax"

Apologies to Mark Thoma for completely ripping off his post:

China may implement a (modest) carbon tax:

Taxing Carbon, by Vikas Bajaj, NY Times: Long considered the biggest holdout in climate change negotiations, China said this week that the country would implement new taxes designed to curb greenhouse gas emissions. Officials in Beijing provided few details, but a report by the state-owned Xinhua news service suggested that the government is working on a relatively modest plan. ...

The Xinhua report ... did not say how big a tax the country would impose, but it pointed to a three-year-old proposal by government experts that would have levied a 10-yuan ($1.60) per ton tax on carbon in 2012 and raised it to 50-yuan ($8) a ton by 2020. Those prices are far below the $80 (500-yuan) a ton that some experts have suggested would be needed to achieve “climate stability,” and which would raise the cost of gasoline by about 70 American cents a gallon.

China’s plan will not make a serious dent in global warming, though the tax may still have some beneficial impact within the country, where air pollution is a serious problem. ...

Meanwhile, in the U.S., many members of Congress find the idea of carbon taxes totally anathema and think such taxes would wreck the economy. They might, however, want to consider a proposal promoted by Mr. Hansen that would take the money collected from carbon taxes — or carbon fees as he prefers to call them — and rebate it in full to individuals. That would help consumers pay for more expensive electricity and gasoline, while giving them an incentive to cut their use of energy and fossil fuels. It’s an elegant way to limit damage to the economy while giving people incentives to do what is right for the planet.

Contrary to what "many members of Congress" (i.e. many Republicans) claim, eliminating a market failure through a carbon tax moves the economy closer to the optimal growth path rather than further from it.

I'm in total agreement with Mark's comment and I would argue further that the revenue from the carbon tax was rebated to individuals with the Bush tax cuts.