Environmental Economics

Lessons from R/R

I predict there there is going to be a lot more replication assignments in graduate courses. Newmark's Door:

It would have been an excellent example in two of my classes. I'm referring to the graduate student who tried to replicate the Rogoff and Reinhart paper and found they had made a substantial mistake. The student was working on an assignment for an econometrics course. Here's part of the assignment: 

The term paper assignment can be in one of two forms: a replication of one empirical econometric paper that interests you, or an original piece of econometric research. Given other demands over the course of the semester, we strongly recommend that you opt for the replication option, which should generally be less demanding than coming up with, estimating and writing an original research paper. At the same time, a replication can be a very illuminating experience . . .

Three comments:

1. Over the last dozen years I've taught undergraduate and graduate tools courses and have also asked the students to do a replication. In a single semester in which they have other courses and other things to do, I absolutely agree that originality should not be stressed. This is because, as should be obvious--but wasn't to my econometrics instructors--it's quite difficult to be original on a timetable. A replication is possibly "doable" and that's vital. 

2. Another advantage of a replication is that any researcher must answer a fundamental question: will anyone else be interested? Replicating a published paper should usually answer that question in the affirmative. 

3. It could be "a very illuminating experience". Indeed! I second that. My students have written authors of published papers for their data or simply to ask a couple of questions and have often been stonewalled. That's a harsh but useful introduction to the world of academic research. 

As I often mention (i.e., whine), I've been stonewalled on data requests myself (was the CVM data collected by Exxon ever released?). Sharing data is always scary, even if global austerity policy or natural resource damage awards isn't/aren't on the line, because of the R/R problem. You always wonder what you may have done wrong in your spreadsheet (or, in my case, SAS program ... luckily for me fewer and fewer graduate students know SAS).

Me? ... I am always happy to share even when the authors are able to hit better journals with my data than I am myself (I should list two JEEMs on my vita under the heading "I wrote the survey but couldn't write the paper if my life depended on it").

Send me your data requests! But please don't go on Colbert if you spot a mistake. 

Community-based economic research

Some context for the tool picture from the local paper:

Since 2008, students in Whitehead's classes have participated in community-based research through the university's Appalachian and Community Together Office, which links university classes with local nonprofit agencies.

Recent research subjects have included Mountain Home Music concert series, the annual 100-mile bike ride, Blood, Sweat and Gears and, most recently, the annual Valle Country Fair.

Whitehead and his students have conducted benefit cost analyses for the Appalachian Institute for Renewable Energy, Appalachian's Parent to Parent Support Network, High Country Local First, Blue Ridge Women in Agriculture and Watauga County Tourism Development Authority.

For each project, students estimate the demand for the service provided by the nonprofit agency, and then predict the impact of a price increase or a change in the characteristics of the agency's services or events. 

Whitehead used data from a post-ride survey for Blood, Sweat and Gears. Beginning and ending at Valle Crucis Elementary School, the event can accommodate up to 1,760 combined participants for a 100-mile ride, a 50-mile ride, and two 20-mile rides.

Typically, the event has sold out, with the lion's share of net profits from the race donated to the American Red Cross.

Since the event is so popular, Whitehead proposed that BSG raise its entry fees based on the survey results. If participation was not hindered by the increase, the event would generate a greater profit for the designated charity.

BSG sponsors agreed to test the hypothesis and raised the registration fees from $60 to $70 in 2012.

The event sold out, with total net profits of $67,510. Of that total, BSG contributed $50,000 to the American Red Cross and the balance to volunteer fire departments, the Watauga County Sheriff's office, and other local agencies.

According to raw data collected in the Appalachian study by 2012 Appalachian graduate John Greeson, last year's event had a total estimated economic impact in excess of $1 million, compared with $900,000 in 2011.
 
Of course, it's up to the client whether or not to adopt the recommendations of the researchers.  "There's always a good, natural tension between the philosophy of an economist and that of the non-profit agency," Whitehead said.

via www2.wataugademocrat.com

 

Daily Demand and Supply: Mary Jane's Last Dance?

With reference to Colorado proposing a 30% tax on recreational marijuana sales (15% excise tax and 15% sales tax),

Jeffrey Miron, an economics professor at Harvard University and a senior fellow at the Cato Institute, a libertarian group ... said that as long as federal marijuana laws continued to be unsettled, collecting taxes would be challenging. Moreover, he said, there is no way to predict how many customers would continue to buy on the black market.

After Prohibition ended in 1933, states levied taxes on alcohol, in part because they were desperate for revenue after the Great Depression. But that shift, Dr. Miron noted, was undertaken with the full support of the federal government.

“It’s easy to get a little overexcited that legalizing marijuana is going to solve the world’s budgetary problems,” Dr. Miron said. “But the question for the tax revenue part of this will be how much the federal government allows these markets to come completely above ground.”

via www.nytimes.com

The revenue collected from a tax will hinge on the relative price-elasticities of demand and supply.  The less price elastic the demand for a good, the more revenue can be collected with a tax--because people still buy the good even at higher prices.  With federal support for marijuana sales it is likely that demand for legal marjuana would be much less price elastic, and a state tax would raise much more revenue for the state than without federal support--making the tax more effective at raising revenue. 

But then again, I guess it depends on whether the goal of the tax is to raise revenue.

And I wonder if the demand for Doritos has increased in Colorado?

If so, maybe they should tax Doritos instead.

 

"Bill for a Bombing Can Be Hard to Tally"

From the WSJ's Numbers Guy:

As investigators try to uncover the motives and methods of the alleged Boston Marathon bombers, another mystery may take longer to solve: How much will the attacks harm the economies of Boston and the U.S.? ...

Economists studying terrorism's impact generally try to separate the direct costs of attacks from the costs of responses. Responses, such as military action in Afghanistan against the Taliban or Boston's all-out manhunt for the bombing suspects, are harder to attribute to the initial attacks because they aren't inevitable. ...

Paying the costs of responses also can bring benefits of its own—for example, by preventing more attacks. "Suppose we did not pay them and allowed the terrorism threat to be higher—what would the economy look like?" said V. Kerry Smith, an economist at Arizona State University. ...

Adam Rose, an economist at the University of Southern California, prefers to include only direct costs such as business interruption and property damage. Even there, estimates vary widely. Prof. Rose and colleagues enlisted eight teams in 2009—with funding from the Department of Homeland Security—to each model the economic impact of Sept. 11, and got estimates ranging from $0—if the pre-existing U.S. recession was entirely to blame for economic woes—to $549 billion. Separating the effects of that recession from those of the attacks is one of the main challenges facing researchers.

Disquietingly, the loss of lives isn't the predominant factor, economically speaking. Even using a value of about $7 million to $8 million per life, a typical estimate used by government agencies for cost-benefit analyses of saving lives, the Sept. 11 attacks cost only about $20 billion to $25 billion in human capital. "It's much smaller than business interruptions," Prof. Rose said.

All of this is interesting (and disturbing to a noneconomist, I'm sure) but I'm left without comment ... except ... one of Adam Rose's teams came back with an answer of $0? I can see how one might really think that in terms of business interruption but there is still the loss of human and physical capital. I hope they gave the money back with submission of their report. 

 

I hate to go all free market on you but ...

Is there a market failure in the tree nursery industry?

Insurance claim money earmarked for rebuilding a tornado-devastated tree nursery in eastern Kentucky may be spent instead to help close a state government budget gap, putting the nursery’s future at risk.

The nursery, one of two operated by the Kentucky Division of Forestry, was flattened by the March 2012 tornado that raked West Liberty in Morgan County. It produces more than 1 million seedlings a year, all native varieties chosen to match the region’s climate and soil. ...

The nursery offers native trees at a reasonable price, said Henry Duncan of Versailles, a past president of the Kentucky Woodland Owners Association, which has about 200 members.

The bare-root seedlings are available in bundles of 10 or 100 and range from $30 to $48 per bundle, according to the agency’s website.

Duncan said some of the work at the nursery seeks to bring back the American chestnut, which was wiped out by a blight in the early 1900s. The nursery also grows most of the trees for planting on reclaimed strip mines, he said.

The only other state nursery, in Western Kentucky, could not meet statewide demand, he said. Commercial nurseries out of state are more expensive and don’t usually offer seed stock that comes from Kentucky trees, which makes them better suited for survival in Kentucky, he added.

via www.courier-journal.com

I can't think of any reason not to expect entry into this market by a private Kentucky nursery firm. The resulting seedling price might be higher without government subsidies but there may be little reason to subsidize tree growing. 

That is, unless the carbon sequestration benefits exceed the cost of the subsidies. But I'd argue this is a role for the federal government and not the states. And those benefits are likely less than the costs since climate change is a global problem, the difference between the number of subsidized public seedlings and private seedlings is likely to have small climate impacts and the impacts are way down the road. 

Onion or True?

On Thursday, April 25, 2013, the House will begin consideration of H.R. 527, the Responsible Helium Administration and Stewardship Act, under a rule.  H.R. 527 was introduced on February 6, 2013 by Rep. Doc Hastings (R-WA) and was referred to the House Natural Resources Committee, which held a markup and reported the bill by a voice vote.

via www.gop.gov

Of course you need to read this in a high pitched voice.

 

Marty Smith begins his seminar at Appstate

Gamefish economics

Some more commercial vs recreational battles:

A new bill is before the General Assembly that would make three fish species gamefish, raise fishing license prices and provide funds for state fishing observers and dredging.

One of the four actions proposed in the bipartisan bill, filed Wednesday by four inland county representatives and titled H.B. 893, “The 2013 Fisheries Economic Development Act,” is to designate red drum, spotted sea trout and striped bass as coastal gamefish. It also seeks to compensate commercial fishermen for “certain losses due to coastal gamefish designations,” increase Coastal Recreational Fishing License fees, appropriate funds for the marine fisheries observer program and provide funding for dredging shallow draft navigation channels.

If these three species of fish are declared coastal gamefish, they’ll only be able to be taken by recreational fishing. The only fish of these species that anyone will be able to buy, sell, transport or exchange are ones grown in an aquaculture operation, imported from a state without a gamefish designation for them, purchased by a restaurant, or possessed by individuals within the daily recreational limit for their own, personal use, including people who are customers of a guided fishing trip.

via www.carolinacoastonline.com

In 2011, ex-vessel revenue for red drum, spotted seatrout and striped bass was $166,915, $140,535 and $1,164,426. NMFS says says that there were 187,669, 296,966 and 141,407 trips that targeted red drum, spotted seatrout, striped bass in North Carolina in 2011. Red drum and spotted seatrout seem like a no brainers for gamefish status. They are a popular targets and commercial landings aren't impressive (price per pound is less than $2). Striped bass, on the other hand, is a top 10 finfish in terms of ex-vessel revenue and the price per pound is almost $3. 

NMFS also says there were 1.5 million anglers in North Carolina in 2011 (down from about a 2 million average over the previous 10 years). A $1 increase in the recreational license fee could compensate for the lost commercial earnings on the proposed gamefish. Of course, not all of those anglers are targeting the proposed gamefish. NMFS says that the total number of trips in North Carolina was 4,739,744 in 2011. So the trips targeted primarily for the proposed gamefish is about 13% of the total. If 13% of the total anglers were asked to pay a gamefish stamp (required to keep a gamefish), almost 200 thousand anglers, then a stamp fee of $7.5 could compensate the commercial fisherman.  

Update from the inbox: "You should look more closely at Striped bass commercial landings.  I believe that the $1M value you cited may include ocean caught striped bass (480K pounds allocated to the commercial sector).  If so, the estuarine component may be quite a bit less."

Never assume that no one reads your blog

I received this email today:

>
> Hi John,
>
> Hope this email finds you well. A colleague of mine came across your blog (http://www.env-econ.net/2013/04/dante-lament-im-not-even-supposed-to-be-here-today.html) and forwarded for my attention ...
>
> Indeed as you mentioned it has been more and more difficult to manage a timely peer review process for many editors. We have been trying to develop different tools in EES to help editors and also looking for suggestions from editors. I notice that you are editor for both JEM and MBE [sic] and you have had good experience with MBE [sic], therefore may I ask if there’s anything you think we could have done or done differently for JEM to improve the reviewing process and provide better services to our editors, reviewers and authors? Your advice will be greatly appreciated.
>
> If you have any questions or anything I might be able to help please don’t hesitate to get in touch.

Cringe. My reply:

Sorry about the whiny blog post, it helps to blow off Assoc. Editor steam sometimes. I'm not sure if JEM can do much to help find referees. The EES and Scopus are very helpful. I do a much better job when the paper topic fits firmly in the field of environmental economics. When I handle papers that stray from that field it tends to get more difficult to find referees. That is why it is easier to find referees with MRE -- it is a niche field and I am usually able to identify referees who are willing and able very quickly.

Thanks for your email!

I'm such a baby.

What I'm doing today

It's take your child to work day...I brought mini-me.

What Drew (5th grade) has learned today:

1. Dad's job is boring
2. Dad talks alot
3. Dad has two screens on his computer (apparently that's cool)
4. Dad walks around alot