Environmental Economics

Updating our CVs with the CVM

Please cite this often (e.g., Mitchell and Carson 1989, Whitehead and Haab 2013)!

Whitehead J.C., and Haab T.C. (2013) Contingent Valuation Method. In: Shogren, J.F., (ed.) Encyclopedia of Energy, Natural Resource, and Environmental Economics, Vol. 3, pp. 334-341 Amsterdam: Elsevier.

Elsevier gives us the following rights:

• The right to print single copies of the Contribution for your own personal use.
• The right to print and distribute copies (including via e-mail) of the Contribution to research colleagues, for personal use by such colleagues.
• The right to post the Contribution on a secure network (not accessible to the public) within your institution. Posting of the chapter as published on a public server can only be done with Elsevier's specific written permission (although you may post a summary of it on a public server).

So we can email the PDF if you'd like.

Here is the link to the electronic version at Science Direct: http://www.sciencedirect.com/science/referenceworks/9780080964522. For some reason it seems that Tim and I are the only authors without our pictures and vita listed. Maybe this "oversight" is for obvious reasons?

Here is the link to where you can buy the print book: http://store.elsevier.com/Encyclopedia-of-Energy-Natural-Resource-and-Environmental-Economics/isbn-9780123750679/. It is only $1520. 

Daily Demand and Supply: Substitution

Rising natural-gas prices mean American Electric Power is burning more coal and less gas compared with a year ago, according to the company’s chief executive.

“Our coal generation has picked back up considerably,” said Nick Akins, the president and CEO, in an interview.

AEP is one of the largest users of coal in the country. But the coal industry has suffered as AEP and other utilities have made use of what had been less expensive natural gas.

The market price of natural gas bottomed out last year at about $2 per 1,000 cubic feet. Since then, it has gradually risen, hitting $4 last month. This is still a low price in the context of the past decade or so, but that is a substantial increase in the short term.

Now, the price exceeds a level at which “you’ll see the pendulum swing back toward coal-fired generation,” Akins said.

via www.dispatch.com

That pendulum is the market forces of supply and demand.

Dante's lament: I'm not even supposed to be here today

What happens to peer review when you can't find a peer? Here is what you see when you can't find a referee for a paper submitted to an Elsevier journal:

This is not an atypical paper. I try potential referees who are experts in the area (searching for keywords in Google Scholar and Scopus), authors of papers in the reference section, referees suggested by the authors, referees suggested by the Elsevier Electronic System, colleagues, friends and neighbors. Potential referees are often too busy (with a stack of other reviews), not in the correct field to review the paper, or much, much worse, ignore the request ("un-invited before agreeing to review"). I understand all this but when I go oh for ten I begin to wonder what the point of it is. 

Grrrrrrrrrrrrrrrr.

I don't have this problem for MRE where I typically ask two people to referee and they are both happy to do it. 

Also, I think I agree to about 5 out of 6 referee requests. 

Negative space

Some economists might see this as a failure of cap and trade:

Europe’s carbon market, a pioneering effort to use markets to regulate greenhouse gases, is having a hard time staying upright. This year has been stomach-churning for the people who make their living in the arcane world of trading emissions permits. The most recent volatility comes on top of years of uncertainty during which prices have fluctuated from $40 to nearly zero for the right to emit one ton of carbon dioxide.

More important, though, than lost jobs and diminished payouts for traders and bankers, the penny ante price of carbon credits means the market is not doing its job: pushing polluters to reduce carbon emissions, which most climate scientists believe contribute to global warming. 

The market for these credits, officially called European Union Allowances, or E.U.A.’s, has been both unstable and under sharp downward pressure this year because of a huge oversupply and a stream of bad political and economic news. On April 16, for instance, after the European Parliament voted down the proposed reduction in the number of credits, prices dropped about 50 percent, to 2.63 euros from nearly 5, in 10 minutes. ...

Europe’s troubled experience with carbon trading has also discouraged efforts to establish large-scale carbon trading systems in other countries, including the United States, although California and a group of Northeastern states have set up smaller regional markets.

Traders do not mind big price swings in any market — in fact, they can make a lot of money if they play them right.

But over time, the declining prices for the credits have sapped the European market of value, legitimacy and liquidity — the ease with which the allowances can be traded — making it less attractive for financial professionals. ...

Until the end of 2012, these credits were given to companies free according to their estimated output of greenhouse gases. Policy makers wanted to jump-start the trading market and avoid higher costs for consumers.

Beginning this year, energy companies must buy an increasing proportion of their credits in national auctions. Industrial companies like steel plants will follow later this decade. ...

Over time the number of credits is meant to fall gradually, theoretically raising prices and cutting pollution.

The reality has been far different because of serious flaws in the design of the system. To win over companies and skeptical countries like Poland, which burn a lot of coal, far too many credits have been handed out.

At the same time, Europe’s debilitating economic slowdown has sharply curtailed industrial activity and reduced the Continent’s overall carbon emissions.

Steel making in Europe, for instance, has fallen about 30 percent since 2007, while new car registrations were at their lowest level last year since 1995.

Big investments in renewable energy sources like wind and solar also reduced carbon emissions, which have fallen about 10 percent in Europe since 2007.

As a result, there is a vast surplus of permits — about 800 million tons’ worth, according to Point Carbon. That has caused prices to plunge. ...

via www.nytimes.com

Me? It looks like government failure. Any market is going to have price fall to zero if the supply is handed out like candy at a parade. To prove my point ask yourself this: when was the last time I went to the candy store after a parade? Q.E.D.

A more useful response to the observations about Europe's carbon market is to consider what is wrong with it and how can it be fixed. Carbon taxes are prone to government failure too.

Retraction Watch: Who deserves to be an author on a scientific paper?

This is worth a read, even for economists:

Although authorship issues are not the most common reason we see for retractions, they’re one of the most vexing. We’ve seen multiple cases in which papers are retracted because colleagues say authors didn’t have a right to publish data, for example. In other cases, authors who didn’t know about a paper are surprised when it comes out.

So for our most recent column in LabTimes, we decided to look at these situations and try to answer some questions:

What’s the best way to acknowledge the work of colleagues who might have helped provide intellectual background for a particular study but who did not participate in the collection of the data or the preparation of the manuscript? And what of the lab head, whose ability to bring in money keeps the lights on and the rats fed?

We discuss inappropriate authors, excluded authors, and even ghost authors, drawing on guidelines from publishers, COPE, and the ICMJE. Have a look, and let us know what you think.

via retractionwatch.wordpress.com

The short answer is if you didn't do any work on the paper, please don't expect to be an author.

Why would you name your pipeline after a winged horse?

What sort of divine stallion would spill its guts all over your lawn?

Exxon Mobil Corp. (XOM) has offered to buy the homes of residents of a Mayflower, Ark., neighborhood where a pipeline ruptured last month spilling thousands of barrels of oil.

The offer is part of a compensation package that includes a $10,000 payment for each household to cover "disruption and inconvenience," as well as payment of cleaning and landscaping costs, moving expenses and rent.

The move is part of Exxon's response to the rupture of the Pegasus pipeline, which on March 29 spilled an estimated 5,000 barrels of oil into streets and yards of this tranquil community. Crews were still at work this week cleaning some areas and the Arkansas Department of Health said Wednesday that none of the residents of 22 evacuated homes have yet returned.

Under the deal put forward by Exxon Tuesday, owners of the 11 homes "directly impacted" by the spill can sell their property to Exxon within the next three years at prices determined by appraisers approved by the U.S. Department of Housing and Urban Development. The company also agreed to buy other homes in the neighborhood if no buyers come forward or of the spill affects the sale price.

For residents who decide to stay in the neighborhood, Exxon said it would make a one-time payment for any reduction in property value in the next three years.

via www.foxbusiness.com

At least the gods realize when they screw up.

Just when I had decided never to go to the Outer Banks again they go all maritime history on me

Still more benefits of replacing the Bonner Bridge!

The public will be able to climb the spiral staircase to the top of the Bodie Island Lighthouse for the first time Friday and take in an unusual view of the Outer Banks.

It’s unusual because just about all you’ll see from up there is the Atlantic Ocean on one side, Pamlico Sound on the other, and the marsh grass and maritime forest in between. ...

When it was completed in 1872, the Bodie Island Lighthouse sent its warning to sailors along a stretch of the Outer Banks that had been dark since an earlier lighthouse was destroyed during the Civil War. Its light was magnified by a Fresnel lens, made of 344 glass prisms that were removed during the restoration and cleaned, and now have been reassembled atop the 170-foot tower.

Except for one weekend in 1988, the public has not been allowed to climb the 214 steps to the top of the Bodie Island Lighthouse, first because it was a working lighthouse and then because it was in such poor shape it wasn’t considered safe.

Congress set aside about $3.1 million to renovate the lighthouse in 2009. But the job proved more difficult than expected when workers discovered that metal braces holding up the gallery and lantern decks near the top had cracked and needed to be replaced. The National Park Service, which owns the lighthouse, needed to find an additional $1.89 million before work could resume last year.

Workers have repaired weathered masonry and stone, replaced corroded metal parts and strengthened the supports for the 10 flights of spiral stairs. They also installed better interior lighting and electrical wiring, as well as a fire detection and suppression system.

The Bodie Island Lighthouse will be the fourth Outer Banks lighthouse, after Cape Lookout, Cape Hatteras and Currituck Beach, to let the public climb to the top. The Bodie Island and Cape Hatteras lighthouses will open for the season Friday and remain open through Columbus Day, Oct. 14.

Tickets to climb both lighthouses, which cost $3.50 to $8, will be free Friday.

via www.newsobserver.com

Some fun with the numbers:

• At $5 per ticket about 200 tourist days, the cost will be paid off in one season if about 25,000 visitors a day climb those steps. All we need to get those kinds of numbers is a "NC Lighthouse Trail" marketing campaign!
• The cost overrun of 37.8% is about the number, 40%, that is in my head for sensitivity analysis in benefit-cost analysis. For example, if an engineer estimates the cost of a capital project at $1 million, increase to $1.4 million for a worst base case analysis. 

See kids, economics is fun!

Happy Earth Day, one day late:

Duke Energy aims to more than double the wind, solar and biomass energy in its portfolio by 2020, according to its 2012 sustainability report.

Duke Energy Renewables, a nonregulated unit, now owns most of the company’s renewable generation – about 1,700 megawatts.

Most of the generation is from wind projects in six states, but the unit has seven solar farms in North Carolina and others in Texas, Arizona and Florida.

The business is growing fast, in part because of federal tax credits.

via www.newsobserver.com

Looking at the picture I drew in class yesterday, the tax breaks push the backstop fuel price down and hurries up the switch point:

Don't you wish you could be in my class every single gosh dang day!

Happy Earth Day

For a little fun on earth day (you know, without actually going outside), check out Google's Earth Day Doodle.  They even give you a handy-dandy cheecklist of things to observe/do.

At the risk of angering the gods indeed

I need to update my "at the risk of angering the gods" slide on my CNREP talk:

Named Distinguished Fellows of the AEA were Harold Demsetz, of the University of California, Los Angeles; Stanley Fischer, of the Bank of Israel; Jerry Hausman, of the Massachusetts Institute of Technology; and Paul Joskow, of the Massachusetts Institute of Technology and the Alfred P. Sloan Foundation.

via www.economicprincipals.com

Congratulations to the new AEA Distinguished Fellows (cringe).