Environmental Economics

Ethics Schmethics

Jodi Beggs on Lawrence Summers' withdrawal as Fed Chair nominee:

BUT…before you go feeling too bad for Summers (or giving him a cookie for taking the high road), there’s another piece of the puzzle to consider. Summers put himself in somewhat of a sticky situation by recently acting as a (presumably very well paid) consultant to Citigroup, which, as per ethics rules implemented by the Obama administration, would prevent Summers from working on matters related to the large bank for a period of two years. Last time I checked, having a Fed chair who was allowed to regulate banks was kind of important, so I’m not really sure what Summers was thinking- he’s not a total idiot, and he most likely doesn’t need the cash, so I can’t tell whether Summers really wasn’t expecting to be in the running for another Obama appointment or whether he thought that the rules wouldn’t apply to him. In any case, I’m kind of disappointed that his withdrawal letter didn’t cite a desire to spend more time with his money.

via www.economistsdoitwithmodels.com

Burn!

Pre-withdrawal, David Warsh beat the ethics drum a few times (here and here and here). 

Who says I'm not a scientist?

At the least, I'm a science project. From the inbox:

One of our staff pharmacists will be giving a talk on insomnia to a group of regional health care providers in early October. She would like to use the image of your actigraphy report on your website at: http://www.env-econ.net/2013/01/results-from-my-actigraphy-report.html. The talk is educational; it is a non-commercial event; the graph is the only part of the website being requested. We are a nonprofit clinic system in [location]. I anticipate approximately 75 or so participants. How may we obtain permission?

You got it! 

Sometimes the posts they just a write theyselves.

When in doubt, always pick 'C'

A poll leading up to the Fed's pivotal decision, expected Wednesday afternoon, found just 27 percent of U.S. adults could correctly pick the correct definition of quantitative easing from among five possible answers.

via ca.news.yahoo.com

BTW: the correct answer is QE is when the Fed buys bonds or other financial assets from financial institutions with new money in an effort to stimulate lending. 

Or something like that.

Ummm...that's kinda the point

The coal industry and its allies in Congress have been quick to criticize the [new regulation which will impose first-ever limits on carbon dioxide from newly built power plants] in advance of its release, even though some of the details have yet to be disclosed, saying it will raise electricity prices and the cost of producing power, particularly from coal.

via news.yahoo.com

General environmental economic principle: Raise prices on things that impose external costs, lower prices on things that generate external benefits.

Why is Mark inviting himself to dinner?

http://www.seattlepi.com/comics-and-games/fun/Mark_Trail/2013-09-17/

It's like I walked up to one of my colleagues and said, "John, I'm writing this paper soon ... I'd be delighted if you would join me as a co-author!" And then I said, "Yes, I would be pleased to be a co-author on your paper!" And then my colleague clears his/her throat and says "Excuse me while I get started on that paper!" And then I say, "I understand [insert name of brand new assistant professor] ... I'm looking forward to proof reading the completed paper before we submit it to a journal!" And every sentence of this sort of conversation is exclamatory. 

When I first read this, wanting to learn more about the "Oil Exploration Act," it was obvious to me that the speech balloon was from Mark Trail. I *think* I'm wrong, I think the Senator's daughter is inviting Mark to dinner and the speech ballon just couldn't reach Anne Marie, but I'm still not totally sure. Mark Trail is a confident man.

And I know, I know, I'm stealing the Comics Curmudgeon's schtick but I can't help myself. 

When your provost is a labor economist

Good things happen?

A new contract for faculty members at Eastern Washington University is being hailed by professors and administrators as a novel way to deal with salary inequities, because the agreement raises professors’ pay based on market rates. The agreement adjusts pay based on the mean salaries identified in survey data from the College and University Professional Association for Human Resources. Eastern Washington’s president, Rodolfo Arévalo, told the Associated Press that the university had been offering professors below-market pay for years, and had been losing faculty members to institutions elsewhere in Washington and in other states. He said he hopes the three-year agreement will fix such salary inequities and raise the university’s profile.

via chronicle.com

Real tweets from real people

I wouldn't let him anywhere near my daughter

"A few other matters" such as collecting political donations from oil companies in exchange for supporting the "oil exporation bill"!

Note: Johnnie Walker, the whiskey, is spelled with an "ie" but my guess is that is not his real name. 

EPA greenhouse gas emission limits on new power plants may not be cost minimizing

Shame on you! This appears to be a situation where the marginal abatement costs are not equalized:

While details of the E.P.A.’s proposal remain confidential, experts predict that it will include separate standards for carbon dioxide emissions from plants fired by natural gas and by coal. Plants using comparatively clean gas would be permitted to emit perhaps 1,000 pounds of carbon dioxide per megawatt-hour, a ceiling within easy reach using modern technologies.

Coal-fired plants, meanwhile, may be allowed to emit as many as 1,400 pounds per megawatt-hour. But coal is so heavily laden with carbon that meeting even that higher limit would require operators to scrub carbon dioxide from their emissions before they reach the smokestack, and then pump it into permanent storage underground.

via www.nytimes.com

One of the more useful things about the field environmental economics is that it can help reduce the costs of achieving any environmental quality target. When there are multiple sources of pollution, costs are minimized when the last unit of abatement costs the same for each source. In other words, when the marginal abatement costs are equalized total costs are minimized. To see this imagine if the last unit of abatement for a new coal plant is higher, say $80, than for a new natural gas plant, which is $50. Costs would be reduced by $30 if the natural gas plant was required to reduce one more unit and the coal plant reduced one less unit. Environmental quality does not suffer and money is saved. 

The article goes on to say that 1400 pounds per megawatt hour might not be technically feasible. This suggests that the marginal abatement cost for natural gas is lower than the marginal abatement cost for coal at these standards. Therefore, costs of achieving the policy goal would be lowered if the standard for natural gas plants is tightened (i.e., fewer pounds of CO2 per megawatt hour) and the standard for coal is loosened. Regulating by prices (e.g., carbon tax) or quantities (e.g., cap-and-trade) are two ways to achieve equalized marginal abatement costs without knowing what the marginal abatement cost curves look like. 

I'm opposed to the oil exploration bill

You can't drill for oil in a wilderness area! (Comics Curmudgeon):

Mark Trail, 9/14/13

Now we know why Senator Mason is so eager to drill for oil in Lost Forest: his daughter’s boyfriend desperately needs petroleum byproducts to maintain his magnificent pompadour. Our nation’s current strategic reserves simply aren’t adequate for the task.