Environmental Economics

User fees and more

Help me do the math:

The state is going to try to provide more funds for dredging in the newly adopted state budget through more boating-related fees.

The General Assembly adopted the budget this week, which sets the budget for fiscal 2013-14 and fiscal 2014-15. Part of the budget is to increase funding for dredging through a new account for funds from boat numbering and titling and motor fuel excise tax revenue.

The N.C. Wildlife Resources Commission will administer this new account, called the Boating Account. The WRC will use at least $3 of every one-year certificate of number fee for boats and at least $9 for each three-year certificate for boating access area acquisition, development and maintenance. Half of each certificate fee will go to the Shallow Draft Navigation Channel and Lake Dredging Fund.

Previously the WRC charged a $15 fee for a one-year certificate and a $40 fee for a three-year certificate. With the new budget, fees for one-year certificates will be $30 for vessels under 26 feet in length and $50 for vessels 26 feet or more. Three-year certificates will be $90 for vessels under 26 feet and $150 for vessels 26 feet or more.

The budget also raises the fees for new certificates of title for vessels or transferring old ones. The fee for a new or transferred title will go from $20 to $30, with $10 from each one going to the Shallow Draft Navigation Channel and Lake Dredging Fund. One sixth of 1 percent of the funds allocated to the state’s Highway Fund for the motor fuel exercise tax will go to the dredging fund, as well.

via www.carolinacoastonline.com

Nevermind, I don't need anyone's help beyond what I can get from Bill Gates. Here is the spreadsheet:

	One year		Three year
	< 26'	>26'	< 26'	>26'
Current fee	15	15	40	40
New fee	30	50	90	150
Half of new fee going to the dredging fund	15	25	45	75
Additional amount going to boating access fund	3	9	3	9
Amount of new fee not going to a fund	-3	1	2	26
Example: percentage of boaters	47.5	2.5	47.5	2.5
Weighted average of new fee not going to a fund	-1.425	0.025	0.95	0.65

If half of each fee goes to dredging fund then, depending on the distribution of one and three year certificates and boat size, there may be some increased fees that don't go to the dredging fund. In the mid-2000s, only about 5% of all NC registered boats were greater than 26'. If this is still the case and let's say that the one and three year split is 50/50, then the weighted average of new fees not going anywhere is about $0.20. I'm guessing that they designed the fees so that the weighted average not going to either new fund is closer to zero than $0.20.

Which means, if my logic is correct, the access and dredging funds are being funded mostly by boaters who buy a three year license. These boaters might have a more inelastic demand since they are fairly sure they'll still have their boat after three years. So, dang, the fee schedule is ... economically smart? I was thinking my conclusion might be different when I started writing this blog post. 

Also, if the boaters need more money than they are willing to pay, why does using the Highway Fund make sense? The user fees should be raised in order to fully fund the fund. And how is NC going to pave a road to every single destination if the boaters are roabbing the Highway Fund?

By the way, I once worked on a shallow draft navigation channel project. Here is a PDF of the report: Download AIWW. The only published output from the report is a chapter in this book. 

Also, the "Boating Account"? Can't NC lawmakers do better than that? How about the Boating Freedom Account or some other liberty-themed moniker?

Video of the Day: Drunk college students benefit the environment and the economy

From the inbox (From Neil Drobny, Director of Environment, Economy, Development and Sustainability at Ohio State):

One of the project teams in my Energy & Sustainability class last spring was challenged by Alcoa to come up with a new idea for building awareness and changing behavior that would increase the recycling rate of aluminum cans stuck at 60% for many years to a level of 75%.  They came up with the idea of a reality TV show around the life and work of “canners” who scavenge aluminum cans for a living.  They made an 11-minute video to convey the idea. The team entered the video in an annual, nationwide student film contest sponsored by the Professional Recyclers Organization of Penna.  Last week they found out they placed second. The video is on YouTube where it has had over 200 views since being posted last week: http://www.youtube.com/watch?v=KB4c72VHkZw. 

 

Whodathunk that shirtless college students generate so much economic opportunity?

Another big broken window

Over the past several decades, power plants have curtailed their emissions of harmful pollutants, such as sulfur dioxide, soot and mercury. This has saved lives, cleaned rivers and lakes and created tens of thousands of jobs in clean-technology industries. But power plants have continued to pump unlimited amounts of carbon into the atmosphere, with disastrous consequences. That pollution has been warming the climate, leading to an increase in deadly and destructive storms, droughts, floods and wildfires. Cutting dangerous carbon pollution now is imperative to protect public health. 

It's also — as cutting pollution has proved to be in the past — a good way to create jobs. 

President Obama's new plan to combat climate change will at last set limits on carbon pollution from power plants, the biggest source of carbon emissions in the country. Energy efficiency will play a key role in the president's plan: it cuts energy waste and reduces carbon pollution; it lowers energy bills; and it also drives job growth. In fact, according to a new NRDC analysis, cutting U.S. power plant pollution 26 percent by 2020 could net 210,000 new jobs, mostly in the energy-efficiency sector. 

via news.yahoo.com

I'm struggling to understand how new technologies can result in a NET increase in jobs. Maybe in the short run the demand for new jobs in the 'energy-efficiency' sector will increase, with no change in jobs in the 'energy-inefficient' sector, but those people are going to come from somewhere (which other sector is going to lose jobs?). Over-time, the 'energy-inefficient' sector will lose jobs due to the increased costs of production. Is the 'energy-efficient' sector that much more labor intensive than the 'energy-inefficient' sector that we will get a net increase in jobs?

I'm confused.

As usual.

I'm a sucker

I paid $2 for this the other day:

The law of demand will be tested today.  You can get my Fundamentals of Environmental Economics for a price of $0 today at Amazon.  This offer ends very soon!

via greeneconomics.blogspot.com

There goes $2 of consumer surplus that I'll never get back again.

Remember that time when Congress wrote the Clean Water Act so that we tried to achieved zero effluent without regard to cost? Do you remember that?

That was awesome.

Well, now they want to combat climate change without regard to benefit:

House Republicans are seeking to thwart the Environmental Protection Agency’s power to weigh the benefits of curbing carbon dioxide emissions when crafting regulations.

Two proposed amendments to legislation likely reaching the floor this week would limit the EPA's use of the “social cost of carbon (SCC),” a metric of estimated damages caused by heat-trapping emissions.

The Obama administration recently increased the SCC estimate used in federal rule-making, drawing criticism from GOP lawmakers.

The underlying bill slated for debate allows the Energy Department (DOE) to block energy-related EPA rules estimated to cost more than $1 billion if the DOE determines they would significantly hurt the economy.

via thehill.com

It would have been more subtle if they required the EPA to use a discount rate of 7% or so. That way those future benefits would be discounted down to close to zero. 

I made Steven Levitt happy

From the inbox:

Dear John Whitehead,

Six months ago, you flipped a coin to answer your question Should I splurge on an expensive meal? Now, believe it or not, you’ve been a part of the research team for half a year! And I’m checking in to hear even more about your coin flip experience.

Click here to tell us how Freakonomics Experiments has worked out for you over the past six months. This is also your chance to let us know what you thought of the experience overall. If you’ve been itching to let us know about something you really liked (or didn’t!) about Freakonomics Experiments, now is the time.

As always, we want to hear from you regardless of whether you followed the coin toss or not—this project absolutely depends on your data.

What’s in it for you? First, we’ll send you our preliminary analysis of the coin toss experiment so you can see what we’ve learned so far. We’ll also put your name in a raffle for one of 20 signed copies of SuperFreakonomics Illustrated. But mostly, we hope you’ll fill out the survey because you know how happy it will make me if you do so.

I’m looking forward to hearing about how these past few months have gone for you!

Thanks for your participation,

Steven Levitt

I took less than minute to make Dr. Levitt happy (but I don't really know how happy it made him):

My odds of winning a copy of SuperFreakonomics Illustrated are 1 in 1341. How freaky is that?

One more picture

Here is the hole after the pipe was dug out:

Another picture

Here is the pipe:

Picture of the day

Don't mess around with mother nature ... there is a river below my parking lot. When it rains a lot the pipe breaks. Go figure!

Daily demand and supply: a quote of the day that most economists should find offensive

A comment on the quote of the day (in added bold):

Motorists shouldn't expect gasoline prices to ever fall below $3 again, an official with AAA said on Tuesday. 

“The days of a national pump price below $3 is probably a thing of the past,” Chris Plaushin, director of federal relations with AAA, told the Senate Energy and Natural Resources Committee at a hearing on fuel prices. ...

Committee Chairman Ron Wyden (D-Ore.) and Sen. Tammy Baldwin (D-Wis.) said refineries play a role in volatile gas prices.

They said the U.S. gasoline market is becoming more dependent on a smaller number of complex refineries. When outages occur — for maintenance, from storms and other issues — prices shoot upwards, they said.

Wyden also suggested that some refineries might also be collecting a windfall on crude oil.

“Supply is up, demand is down, but prices at the pump are still stubbornly high,” Wyden said.

via thehill.com

Isn't this impossible? First, whenever there are outages in refineries then supply goes ... down! Secondd, here is a graph of the four week average production/consumption (i.e., equilibrium quantity from the textbook) from the EIA. It looks to me like production/consumption has increased overall since 1990, with a pre-("great") recession peak and then constant except for a dip at the beginning of 2012. 

The next line of the article is this: "Several witnesses said oil prices are determined on the global market." I agree. It seems very difficult to make the case for domestic market manipulation and windfall profits.

The rest of the article goes on to quote (a) those who benefit from government policies that favor increased domestic production crediting lower than otherwise prices on increased domestic production and (b) those who would benefit from removal of ethanol requirements blaming higher than normal prices on renewable energy standards.