Environmental Economics

Mr. Webb must have never lived in an apartment with other male graduate students*

This excerpt contains the quote of the day:

Industrial-scale hog farming has been a contentious issue in Eastern North Carolina for decades. In 1997, amid uproar about environmental problems in hog farming, the state slapped a temporary moratorium on new or expanded hog farms that used what is known as the lagoon-and-spray-field method. It’s simple and relatively inexpensive, yet odorous and pollution prone: Waste is flushed from hog barns into open-air lagoons, and the effluent is sprayed on fields.

In 2000, Attorney General Mike Easley negotiated the landmark Smithfield Agreement with the state’s main pork producers in which the company agreed to concessions including paying $50 million over 25 years for environmental projects. They also funded a $17.1 million research quest for a new method of treating hog waste.

Yet in 2013, virtually all North Carolina hog farms still use the same method.

[Don] Webb, a former hog farmer himself, owns a fishing camp – a string of small lakes where members fish for bass, brim and crappie – near Stantonsburg in Wilson County.

Webb said Stantonsburg recently spent millions on a sewer system for its 800 residents. But a farm with 3,400 hogs, which might produce the equivalent waste of 10,000 people, is allowed to store its sewage in ponds and spray the contents on fields.

“They need to keep their stench on their own land,” Webb said. “A good American would never stink up another American’s home with feces and urine.”

Another complainant is Elsie Herring of Wallace, who lives on a family plot her grandfather bought 99 years ago. Next door is a hog farm with two hog houses and a lagoon. The farmers spray the hog waste on fields next to the Herrings’ property.

“Sometime it comes over like it’s raining on us,” Herring said. “It holds us prisoner in our own home. It has changed our life entirely.”

via www.newsobserver.com

Here is the abstract from the seminal pig poop paper (PPP):

A hedonic study of rural residential house sales in southeastern North Carolina was conducted to determine the effect of large-scale hog operations on surrounding property values. An index of hog manure production at different distances from the houses was developed. It was found that proximity caused a statistically significant reduction in house prices of up to 9 percent depending on the number of hogs and their distance from the house. The effect on the price of a house from opening a new operation depended on the number of hogs already in the area.

*Note: Either that, or male graduate students are not good Americans.

"Environmental Economics 101 applied to EU ETS"

Nathaniel Keohane and Gernot Wagner:

No one questions the very existence of stock markets when prices rise or fall. Not so for carbon markets. In April, prices in the EU’s emissions trading scheme fell to record lows of below €3 a tonne of carbon dioxide, after an unsuccessful vote in the European parliament to prop up prices. Observers wrote obituaries.

Earlier this month, in its second vote, the parliament approved a plan to “backload” carbon allowances and, thus, limit supply temporarily. Prices rose, though barely above €4, far below its high of above €30 five years ago. But while the price has grabbed the headlines, it is fundamentally the wrong focus. It also detracts from the fact that the ETS has succeeded at its most important job: cutting pollution.

Carbon emissions under the ETS are down by more than 10 per cent. And because the EU has established a mandatory declining cap, emissions will continue to go down by 1.74 per cent a year, every year – even if politicians take no further action. That path achieves about 70 per cent reductions below 1990 levels by 2050. ...

None of that means the cap should not be tightened further. That is exactly the opportunity low carbon prices provide. However, the goal of the ETS is not to make emissions costly, but to make them scarce. The price is only a means to an end. ...

The beauty of the market approach is that it provides a powerful incentive for cost-saving innovation, pushing prices down – without the need for governments to pick the technologies that are best at reducing emissions. That is what happened with reducing chlorofluorocarbons under the Montreal protocol, getting lead out of gasoline and cutting sulphur dioxide from smoke stacks. And that is what will happen when we cap carbon emissions around the world.

I found this on the internet. Here is the link but it is fairly useless since the Financial Times has the gall to ask you to pay for content. Luckily for me, I am a member of the Land and Resource Economics Network (i.e., the RESECON listserv [remember those?]) and the authors emailed it there. 

I tend to agree with the sentiment of the article, it is the pollution reduction that matters, but for cap-and-trade to work, it seems like the trading mechanism should be more stable than the EU's. No one questions the existence of the stock market when prices fall, sure, but when prices crash a lot of people lose money, people buy cash and commodities and the real economy doesn't work as well as it usually does. Falling pollution doesn't hide the fact that something stinks about EU cap-and-trade and that it could be improved. 

I heart Ironman

Once again, I'm reminded to be very careful about what I post here:

Suppose, for a moment, that the people who run your local government really cared enough about you and your fellow citizens to do something that might actually benefit you, by funding a fancy transportation project that could shave 13 minutes off your time while commuting once it's done.

Is it worth it?

The answer, at this point, is "it depends". And honestly, what it depends upon is what your and your fellow commuters' time is really worth.

That's why we've created the tool below, so you can see how much you're saying your time in traffic is worth if the project goes forward! Just enter the indicated data in the tool below, and we'll do the math....

All the default numbers in the tool above are taken from a federally-funded transportation project in North Carolina, which promised to spend $461 million to reduce the travel time of some 100,000 train commuters between Charlotte and Raleigh by 13 minutes a trip, which would bring their one-way transit time down to just under three hours. We then adapted the math developed by John Whitehead for determining the benefit-cost ratio for the project to estimate what value per hour saved per individual that the state's politicians were assigning to the primary declared benefit of the project.

via politicalcalculations.blogspot.com

The tool says that the NC project implicitly values commuter time at $638/per hour. 

I'm ready for the sequel...Snakicane

I have no idea how I missed this last night.  But I guarantee I'm setting my DVR for a rerun:

 

Told you so...

...yesterday.

Prices of oil and gasoline futures have increased sharply in July, according to Gasbuddy.com chief oil analyst Tom Kloza. And these prices will inevitably be passed on to consumers in the coming weeks.

The price of unleaded gasoline could jump by at least 25 cents per gallon in August, said oil trader Dan Dicker, author of "Oil's Endless Bid."

via money.cnn.com

Can we replace all of the politician's with their aides?

My only quibble with this guy is his pseudonym:

A conservative House GOP aide, writing under a pen name, says Republicans are screwing up on climate change but can seize the high ground from Democrats by promoting a “revenue-neutral” carbon tax.

The aide’s essay urges Republicans to embrace the carbon tax idea, which currently has buy-in from some conservative mavericks outside Capitol Hill but faces huge GOP resistance in Congress.

“Someone in the GOP needs to say it: conservation is conservative; climate change is real; and conservatives need to lead on solutions because we have better answers than the other side,” opens the essay by “Eric Bradenson” that was published Wednesday on the website Real Clear Science.

Bradenson laments that Democrats have “owned the climate change conversation” but have lousy policies, while Republicans are wasting time questioning climate science instead of pushing a better policy agenda.

“Republicans can admit that 97 percent of scientists just might be right without having to embrace Democratic ideas that would grow government,” states the essay by Bradenson, who claims to work for an unnamed GOP member.

It extols the merits of a revenue-neutral tax on carbon emissions that would be offset with reductions in other taxes, while phasing out subsidies for all energy sources. ...

Bradenson alleges that the left, in contrast to conservative proposals and principles, wants to use a carbon tax “as a cash cow for the federal government, using the revenue to pay for legislators’ pet projects or to keep subsidies flowing to the preferred energy source du jour.”

via thehill.com

I would have gone with "Toby Flenderson." And, actually, another quibble is that, if the national debt is a problem, the extra revenue can be used to reduce the deficit. While reducing the deficit is mentioned as a good thing it, apparently, can only be achieved by getting rid of energy subsidies.

What do you bet that the major activity caused by this essay is to try to figure out who this "Flenderson" is and blackball him/her from politics (so that he/she can go on Fox News and get rich)?

If both Republicans and Democrats hate the idea, splitting the Farm Bill must be a good thing

I'm risking biting a hand that partially feeds me with this post:

Bruised from the defeat of a massive farm bill last month, Republicans are giving the legislation another chance by bringing a pared-down version to the House floor.

GOP leaders were still counting how many votes they could muster for the new measure, which drops the politically sensitive food stamp portion of the bill, when they released the legislation late Wednesday. The White House swiftly issued a veto threat, and House Democrats reacted angrily to the last-minute move. A vote is expected Thursday.

The dropped section would have made a 3 percent cut to the $80 billion-a-year food stamp program. Many Republicans say that isn't enough since the program's cost has doubled in the last five years. Democrats have opposed any cuts.

The White House said food stamps should not be left out of the bill. The Obama administration had also threatened to veto the original bill, saying it did not include enough reductions to farm subsidies and the food stamp cuts were too severe.

Republicans are proposing a measure containing only farm programs, with a food stamp bill to come at a later date. Farm groups, anti-hunger groups and conservative groups have all opposed the idea, for different reasons.

via hosted.ap.org

I have often stated (in private of course) that food stamps and farm provisions of the farm bill should be separate pieces of legislation.   The food stamp program is an equity program designed to redistribute income from those who have to those who don't.  It has little to do with efficiency of markets. I'm not saying that's a bad thing, but it is difficult to design an effective program when it is paired with legislation that is supposedly aimed at improving market efficiency.

The farm provisions are a highly bastardized attempt to deal with market failures in agriculture. About the only farm provision left in the Farm Bill that is even partially defensible on efficiency grounds is subsidized crop insurance designed to help alleviate systemic regional risks (like drought).  Private insurers have trouble staying afloat in the presence of systemic risk, and actuarily fair pricing would be prohibitively expensive for many farmers. Beyond that, many of the farm provisions in the farm bill bear little resemblance to efficiency improving market policies and we would all benefit from an examination of the provisions independent from food stamps.  If that happens (and that's a big if) I'm not sure Republicans (or farmers) would like the outcome. 

Now I will sit and wait for my boss' phone call...

 

I detect a trend

Using my amazing economic powers of deduction (perception? prognostication?) I think oil prices have been rising.  I predict this will spill over to gas prices...soon.

And maybe you won't need a microscope to read the cost-minimizing font size

From the inbox:

Dear AERE members and friends of AERE:

The AERE Board met on June 7, 2013 during the AERE Summer Conference in Banff where it voted unanimously to commence final contract negotiations with the University of Chicago Press (UCP) to begin a new journal in the field of environmental and resource economics. This new journal will become an official journal of the Association of Environmental and Resource Economists and will join our outstanding policy journal, the Review of Environmental Economics and Policy, as the second of two flagship journals owned by our Association! We are finalizing contract negotiations with the University of Chicago Press and have today informed Elsevier, the publisher of the Journal of Environmental Economics and Management (JEEM), that we will not be continuing our relationship with them after the May 2014 issue. The company representative was very gracious in responding to this news and we look forward to a smooth transition.

JEEM (whose title is currently owned by Elsevier) has been an excellent journal, providing our profession with a consistently high quality venue for intellectual exchange and discourse.  However, after years of consideration and a careful evaluation process including the publication of two AERE Newsletter articles describing pros and cons of launching a new journal, a well-attended public discussion at the AERE Summer Conference in 2012 followed by an online bulletin board discussion, the hiring of a professional consultant, and the elicitation and evaluation of bids from alternative publishers, the AERE Board believes the time is right for the launch of a new journal by our Association.  

In so doing, AERE will own the journal and will retain maximum control of all current and future decisions regarding academic content, journal management, and dissemination of the journal content.  While the specific details of bids received from publishers are confidential, the AERE Board unanimously concluded that the bid received from the University of Chicago Press best allows our Association to meet the goals set forth on our Bulletin Board in summer 2012. 

The Board can report the following very exciting aspects of our new agreement:  

• Free online access to the journal for all Association members;
• Inclusion in JSTOR, the nonprofit permanent repository of academic research;
• An excellent portfolio fit, with immediate inclusion in a UCP package including journals of 27 academic societies and many top journals in economics, including the Journal of Political Economy, Economic Development and Cultural Change, Journal of Labor Economics, and The Journal of Law and Economics;
• Very reasonable institutional pricing, which means worldwide access for scholars is maximized;
• Assured immediate library acceptance through JSTOR and complete Chicago Package connection; and  
• A guaranteed minimum payment to the Association beginning in a few years, with a percentage of the revenues, if greater.  

The Board has created an ad hoc committee to handle the transition to a new journal.  This committee is chaired by AERE Past President Cathy Kling and includes AERE Vice President Don Fullerton, AERE Board Member Nick Flores, and former JEEM editor Joe Herriges.  They will be communicating periodically with the AERE membership to provide information on the establishment of our new journal, on submission deadlines, on editorial leadership, and other essential information for rapidly making it the premier research journal in environmental and natural resources economics.  To kick things off, the committee has set up a bulletin board to begin discussion about the possible names of our new publication. Please take a look and give us your ideas! 

http://www.quicktopic.com/50/H/hZy3zstj5AFp. 

The AERE Board is excited about this important new endeavor and hopes you will give it all the support it deserves.

Best,

Alan

Alan J. Krupnick
AERE President

Seriously, could JEEM's font size be any smaller (or, do I need a new bifocal prescription)?

Alternate titles: "Haab was right about invasive species," or "Why, oh WHY won't people listen when I write?" or "It's a big fish vacuum cleaner."

On April 30, 2012, I wrote:

Here is my solution to any aquatic invasive specie problem. Have the government start a covert marketing campaign designed to convince the public that the invasive specie is in fact a delicacy. They can even rename the specie to make it sound appetizing (think Toothfish to Chilean Sea Bass). But here's the catch... once the public is convinced of the delectable nature of the new exotic seafood, fail to regulate the fishery. As demand increases, prices will rise and the tragedy of the commons will eradicate the invaders.

Over the weekend, I saw this:

Visit NBCNews.com for breaking news, world news, and news about the economy

 

That's what I said...over a year ago. 

People really should start to read this blog more...we do make sense, in a nonsensical way.

And I want credit, dammit.