Environmental Economics

A cautionary example of why policies (good or bad) are difficult to remove once implemented

The new flood insurance rules, which went into effect on Oct. 1, are intended to make the deeply indebted NFIP solvent by no longer charging government-subsidized rates on homes in flood-prone areas. The hikes will affect about 20 percent of the 5.5 million people who have NFIP policies around the country, as well as thousands more who live in areas that didn’t used to be considered flood-prone but who now must buy insurance under the new FEMA map.

The NFIP subsidized rates have allowed people for years to build in flood-prone areas that, in some cases, probably never should have been built on in the first place. But the feds’ solution to this — hiking up rates over four years until they reach market price — could leave millions of homeowners unable to afford the steep new prices. If these homeowners try to sell their houses, they’ll most likely find it tough to find a buyer, who would inherit the new insurance rates. (People with mortgages are required to purchase the insurance — those who’ve paid off their homes can skip it.)

via news.yahoo.com

For years, the federal government has subsidized flood insurance premiums for people whose homes are built in flood-prone areas.  One can speculate as to the motivation (real or otherwise) for the subsidization--those with low income can't afford to build elsewhere, private insurance markets overprice insurance in flood prone areas,...--but one thing is certain: flood insurance priced below the efficient market price will lead to too much construction in flood prone areas.  Perhaps worse, if the insurance rates are too low--as was the case with the National Flood Insurance Program--there is an incentive to rebuild in areas likely to flood again. 

It seems the federal government learned some lessons after Hurricane Katrina and has decided to raise the price of flood insurance by removing subsidies for rebuilt homes in the wake of Super-duper Storm Sandy.  While well-intended, and the right move from an economic efficiency point of view, the removal of an inefficient policy is going to create short-term hardships for a significant number of people. 

Don't get me wrong.  I applaud the move toward actuarily efficient pricing of flood insurance.

I just feel bad for those who made decisions based on bad policy only to see it changed midstream.

See.

We economists do have feelings.

 

WCERE call for papers

From the inbox for all you non-AERE members:

The 5^th World Congress of Environmental and Resource Economists (WCERE) will take place from June 28 to July 2, 2014 in Istanbul, Turkey, a unique World Heritage city that straddles Europe and Asia.  You are invited to submit theoretical and empirical papers in all areas of environmental and natural resource economics for presentation at the World Congress. Papers are to be submitted through the World Congress website: www.wcere2014.org—the deadline for complete submissions is January 15, 2014.

Hosted by Istanbul Technical University (ITU), WCERE 2014 is jointly organized by the Association of Environmental and Resource Economists (AERE) and the European Association of Environmental and Resource Economists (EAERE), in cooperation with the East Asian Association of Environmental and Resource Economists (EAAERE).

I'm only a week late...but still something to watch in the coming months/years/decades...

The Supreme Court on Tuesday agreed to hear a major case challenging Environmental Protection Agency regulations of greenhouse gas emissions from stationary sources like power plants. The justices declined to hear a variety of related attacks on the agency’s authority to address climate change.

via www.nytimes.com

Congratulations to Matt!

Matt Kahn:

Based on a ranking of all of the world's economists based on one's publications over the last 10 years, I rank #257.  Based on this ranking, you can take a look at my peers.   Some of these folks are pretty good.  Based on this criteria, I'm ranked #2 among all UCLA economists.  Sounds right to me.

via greeneconomics.blogspot.com

Picture of the day

Photo Credit: P. Carmen

Location: Moses Cone Manor House on the Blue Ridge Parkway

I made it on the "Calendar Of Events" at "The Blowing Rocket"!

What did you do on Thursday afternoon of fall break?

Oct. 17

FREE CLASSES: High Country Lifelong Learning offers lectures and activities free to adults in the area. John Whitehead, chairman of the economics department at ASU, will speak on “Energy Economics” from 2 p.m. to 3:30 p.m. Oct. 17. The presentation takes place in the dining room at the Lois E. Harrill Senior Center in the Watauga Human Services Building, located on Poplar Grove Connector, Boone.

via blowingrocket.com

I changed the title to "Energy (and environmental) Economics." Here is the PDF of the presentation:  EnergyEconomics101713. Not surprisingly, I couldn't help but include a flattering picture of myself.

Quote of the Day: I imagine him sticking out his tongue after writing this

In the meantime, it is simplistic and irresponsible to use disagreements among economists on a handful of difficult questions as an excuse to ignore the field’s many topics of consensus and its ability to inform policy decisions on the basis of evidence instead of ideology.

via www.nytimes.com

So there!

No problem, I get all my science news from the Sunday Mark Trail

Rob Elliot:

Only bank share prices have collapsed as quickly.  The death of environmental journalism has been as rapid.  According to Zofeen Ebrahim at IPS US science reporters are themselves becoming an endangered species.

The New York Times has canned its "green blog" and earth and environmental science journalism courses have closed at Columbia University and John Hopkins University.

The article quotes the number of "science" sections of newspapers falling from 85 in 1989 to just 19 in 2012.

This timing of this blog's resurrection appears to be either well timed (less supply and hence less competition) or even more pointless than before (as I assume newspapers cut the columns due to lack of demand/interest).

Hopefully as a global blog that does not rely on US readers there is some hope.  In fact blogs by their nature do not rely on having any readers at all (which is good news for this blog).  We have no adverts, no begging buttons and make no money whatsoever.

Of course these columns may have disappeared bbecause the twitter generation get their green news from high quality blogs (and less high quality blogs like this one).

The UK at least still appear interested.

via globalisation-and-the-environment.blogspot.com

Good to see GatE back, and with a new look! 

Is that a cell phone or a walkie talkie?

http://www.seattlepi.com/comics-and-games/fun/Mark_Trail/2013-10-18/

Nothing to lose? I'm no attorney, but recording a conversation without permission might be illegal. But nevermind, like an idiot, Mark let the battery on his giant cell phone run down before he planted it. So, Mark is going to bluff an obnoxious, and potentially dangerous if you ask me, Big Oil Company lobbyist who is also somehow the "right hand man" for The Senator (isn't it against the rules for someone in Congress to employ a lobbyist?) with a taped conversation that isn't.

What could go wrong? In reverse order of importance:

1. Johnny Walker teases Mark Trail about the size of his cellphone.
2. Johnny Walker loses it and beats the heck out of Mark Trail.
3. The Senator is disgusted by Mark's shady tactics, introduces the Lost National Forest Development Aact and gets rich developing the heck out of Lost National Forest.
4. Johnny Walker steals Mark Trail's giant cell phone while he is tracking the wounded "old buck" Elk, breaks the antiquated security system is seconds, downloads Mark's embarrassing selfies and shuts Mark up forever. 
5. Mark Trail goes to jail for illegally recording a private conversation.
6. I continue to obsess about the faulty logic and contrived exclamatory conversations in Mark Trail leading to duel collapses of my research agenda (and I'm using that word loosely) and teaching evaluations, a scolding from the upper administration of the university and a continuation of my public humiliation.

I can't stand it anymore

Escapability is not a word:

We do not have an entry for escapability. Have a look at how it is spelled. Did you type it correctly?

via dictionary.cambridge.org

Yet, Jesse Palmer used it a few minutes ago and other football announcers also seem to love it. I think we have Monday Night Football's Dennis Miller to blame. How in the world is that mess still around 13 years later.