Environmental Economics

Is the IPCC's science the gold standard or questionnable?

As Colbert transitions the NC Sea Level Rise panel continues its work:

The N.C. Coastal Resources Commission’s science panel made a few final adjustments Monday to the draft five-year update to its sea level rise report before agreeing it was ready for peer review. 

The draft – which contains projections of 2-6 inches of sea level rise in the next 30 years, varying by location along the North Carolina coast – will now be sent to the CRC by Wednesday, Dec. 31. From there it will be sent to state agencies for internal review and to scientists and others outside of state agencies for external review. The CRC has also selected Dr. Bob Dean of the University of Florida and Dr. James Huston, formerly of the U.S. Army Corps of Engineers, to act as a Technical Peer Review Group for the report. ...

The General Assembly directed the CRC to have the panel perform the five-year update to its 2010 sea level rise report. The direction was made in response to concerns and criticism of the report that came from the public – including local government representatives – during public meetings.

Critics of the 2010 report have said the data wasn’t reflective of entire state coast and that including a rate of 39 inches of projected sea level rise by 2100 for creating state policies would hurt the coastal economy. In response, the CRC charged the panel with doing a five-year update and narrowing the scope of the update down from the year 2100 to the next 30 years. ...

There were five audience members at the Monday meeting, three of whom spoke about the draft update during public comments. ...

For several commentators, the panel’s continued inclusion of the IPCC report as a source of information was an issue. David Burton, science adviser and board member of NC-20, a nonprofit organization of local government representatives from the 20 coastal counties in North Carolina, said he thinks the current draft is much better than the 2010 report, but he thinks the report needs “more balance,” meaning more language acknowledging the disputed nature of sea level rise.

Mr. Burton reiterated a point he made in his comments at the Nov. 19 panel meeting, saying he thinks the panel shouldn’t use data from the IPCC report. He said he had been one of the IPCC report’s expert reviewers and that the report’s sea level rise acceleration scenarios aren’t credible.

Dr. Jim Early, a retired engineer, ..., along with John Droz Jr., a retired physicist from Morehead City who has been outspoken on the draft update, and Dr. Stan Young, assistant director for bioinformatics of the National Institute of Statistical Sciences and adjunct professor of statistics at N.C. State University, submitted a list of 31 proposed changes to the draft. These proposals ranged from language changes – like replacing the word “sustainability” with “human well-being” – to requests to omit the IPCC report from the report and include references from sources like the Nongovernmental International Panel on Climate Change, which dissents from the IPCC’s views.

Mr. Droz, while present at the meeting, didn’t comment. However, in an email to CRC Chairman Frank Gorham, also copied to the News-Times, Mr. Droz said the draft discussed at the meeting “did a reasonably good job of making a technical matter understandable to the public.” However, he said the draft makes the assumption that the IPCC is “the gold standard” for sea level rise information. 

via www.carolinacoastonline.com

Is it just plain crazy to question the IPCC's science? or healthy skepticism? My impression was that the IPCC was doing a good job of including measures of uncertainty in their forecasts.

Daily Demand and Supply (2): Oh, the horror!

Is the great bourbon shortage really real? 

After writing about it last week, we got some rather irate emails from readers, alleging that we were being fed a marketing scam. (There's some skepticism out there on the internet, as well.) After all, there's still plenty of bourbon in the liquor stores today! 

First off, we reached out to Kentucky's Buffalo Trace Distillery, which has been the source of most of the "bourbon shortage" hype.

"Yes, I can assure you the bourbon shortage is VERY real, not a ploy at all," a spokesperson told Business Insider "Our intent was never to get people worked up, or to start hoarding it, we did it out of a very genuine desire to let people know this was on the horizon."

via www.businessinsider.com

You may think that a bourbon shortage has nothing to do with environmental economics, but you would be wrong. You see, John has Kentucky roots, where bourbon is a way of life. And I, well, I live as though bourbon is a way of life (or at least a food group).

Daily Demand and Supply: Lobster of the Land*

You can tell that I'm ramping up to teach principles of micro--I'm using env-econ to store examples, even if they have nothing to do with the environment.  So here's a nice graph of ground beef prices over time.  Now i just need to figure out what is going on so I can sound smart in class.

*Get it?  Chicken of the Sea...Lobster of the Land...oh nevermind.

Guest blogger: Dave McEvoy

On Monday I read this:

Negotiators eked out a global agreement to fight climate change during an environmental summit in the Peruvian capital, Lima, early Sunday. The approach taken by this agreement is quite different from that of the more familiar Kyoto Protocol. There are no formal commitments to reduce carbon emissions by a numerical target during a specific time frame. Instead, each state promises to design its own “nationally  determined contribution” that “represent[s] a progression beyond the current undertaking.” There is no clear mechanism to ensure that these national efforts are  meaningful nor an obvious way to enforce these self-imposed obligations.

via www.washingtonpost.com

And couldn't really think of much to say. I sent an email to my colleague Dave McEvoy, who focuses his research on international environmental agreements, with "ever thought about writing a blog post" in the subject line and "I bet you could help me understand the "Lima accord" in 2-3 paragraphs." Tuesday night I got this and posted it today. 

 

Guest Post: The Lima Accord -- A New Climate Agreement or a Series of Pinky Swears?

Climate negotiators forged a new climate agreement this past weekend. It’s been named the Lima Accord, and it relies on countries to individually decide if and by how much they want to reduce their emissions of greenhouse gases. In other words, the Lima Accord sets out to solve a problem that was caused by countries doing whatever they wanted by letting countries do whatever they want. So maybe they didn’t nail it. 

Now, it is possible that a system of individual pledges under the Lima Accord leads to a significant reduction in global greenhouse gases. The problem is that nobody has clearly articulated why we should expect it to. The climate problem, after all, is a social dilemma; one in which individual interests are at odds with the collective interest. The goal of an international climate treaty is to better align the individual and collective interest. To expect a system of voluntary pledges to achieve that goal requires that something else be at play. The agreement compels countries to be transparent with their pledges, and so perhaps behavioral motivators like “peer pressure” or “shame” can move countries to ambitious emissions reductions. Indeed, economists have documented that these can be powerful motivators. However, for a name-and-shame strategy to be effective, countries must be able to easily make comparisons between commitments. On a global scale, this is difficult. Comparing the equivalence of emissions abatement pledges between developed and developing countries is a very subjective analysis. Each country is on its own development path, with its own perspective on the nature of the climate problem. To exploit behavioral responses from shaming, the global community must be able to determine which actions are shameful. 

Perhaps the bottom-up, pledge-driven agreement is trying to harness the conditionally cooperative nature of countries. This is the idea that countries are more willing to take on costly emissions reductions if other countries take on similar burdens. I have little doubt that this is true. In fact, when the United States declined to ratify the Kyoto Protocol they argued that the agreement would achieve little without major polluters like China and India taking on emissions reduction responsibilities. The problem is that without defined emissions targets, the pledge system does not provide a clear structure to base conditional responses on. Moreover, without an aggregate target in mind, there is no assurance that an individual country’s efforts will make a difference. Indeed, emissions reductions by one country can be completely offset by increased emissions of another.

We have seen recent movement away from trying to negotiate top-down approaches towards more bottom-up efforts. This is understandable. By most accounts the Kyoto Protocol is a failure. But for all its flaws, Kyoto recognized the fundamental point that climate change is a social dilemma; one that is unlikely solved through unilateral management. I think the Lima Accord largely misses this point. 

Daily demand and supply: surge pricing in the Sydney CBD

The Uber price gouging in Sydney problem was brought to my attention by Daniel Brent (thanks!). Jodi Beggs has covered it better than I could:

I’m beginning to think that the overlap in the Venn diagram of “Economic Theory” and “Good PR” is an area that my cat couldn’t resist trying to crawl through due to her obsession with small spaces. Case in point (re the economics, not the cat):

On the plus side, Uber has started explaining the rationale behind the price increases. On the down side, people still hate it. On the…maybe up side, it appears that people may have progressed a bit from kidding themselves into thinking that regular prices and enough available supply is an option and are at least considering the relative suckiness of high prices versus a shortage:

She then describes the usual economic argument that price reflects willingness to pay, demand/supply results in efficiency, admits that she is bored even writing it again, and then gets to the interesting stuff. What is galling about surge pricing / price gouging is not really that prices fluctuate, it is price reflects willingness and ability to pay and that you can be sure that the rich people are going to get out of the Sydney CBD / a bag of ice after a hurricane (even Uber's condolences invited the wrath):

... In return, I will distance myself a bit from Econ 101 and acknowledge that, the more income/wealth equality exists in a market, the less likely the system of rationing via prices is to be either truly efficient or fair. Unfortunately, I don’t know where to go from there, since it’s unclear what a more optimal system would look like ...

I totally agree. Economists don't do enough to make sure A maldistribution of income undermines the efficiency argument (i.e., I believe in diminishing marginal utility of income) and I don't know where to go from there (except to expand the earned income tax credit). 

Note: I couldn't figure out how Jodi embedded those tweets so I resorted to a screenshot. The future would be a lot cooler if someone could point me to the twitter embedding trick. 

And, But, Therefore (SEA meeting mini-debrief)

Once again, IMHO, the AERE sessions at the SEA meetings were a big success. AERE sponsored 15 sessions, an all time high. I attended X of these and each one had an audience between 15 and 25 (with one exception). The presentations were great (i.e., I learned a lot). Most every paper received good comments and questions, hopefully improving the papers. The highlight for me (other than meeting all of the new economists) was the panel "Top Ten Tips for Young Economists: Teaching, Research and Service." The room was packed for this one (see the picture below). In case you missed it, here are the presentations (thanks to everyone for making their presentations available!):

Glenn C. Blomquist, University of Kentucky " Sayings from the Professor's Almanac"

Douglas S. Noonan, Indiana University-Purdue University, Indianapolis "Navigating the Journal Review Process"

Will Wheeler, U.S. Environmental Protection Agency "Grant Writing Best Practices"

Jill L. Caviglia-Harris, Salisbury University "Five Steps to a Kick-Ass Presentation"

John C. Whitehead, Appalachian State University "Academic Blogging"

The title of this post comes from Jill's kick-ass presentation (make sure to check out her "80s hair" picture). 

The call for abstracts for the AERE sessions at the SEA meetings in NOLA (!) is on the AERE website [pdf]. 

Here is what may have been the biggest session audience during the conference: 

A question about obscure environmental economics journals

Does anyone know much about the following journals (in alpha order) beyond my notes?

• Environmental Economics
• published by Business Perspectives which is on Beall's list [i.e., may be a "fake" journal]
• listed in EconLit
• not ranked by RePEc
• Environmental Economics and Policy Studies
• published by Springer
• listed in EconLit
• ranked #655 by RePEc
• field ranked #17 by Elsevier 
• sponsored by SEEPS
• Journal of Environmental Economics and Policy
• published by Taylor and Francis
• not listed in Econlit
• not ranked by RePEc
• sponsored by UKNEE

My opinion is that EEPS and JEEP are reputable and that EE is not. If that is correct, how reputable are they? Where should they be ranked in this list (see the notes)? Should I be submitting papers to these journals (after rejections from the top 7 or go to regional ag econ journals or applied economics)?

Any opinions out there?

The economic value of an economics major ...

... measurement may become more difficult:

When research in 2011 showed that workers in the fields of science, technology, engineering, and mathematics earned a premium of 25 percent over other workers and have just a 5.5-percent unemployment rate, it reinforced strong economic incentives to get more people into those STEM fields.

But research like that might soon become more difficult to conduct. That’s because the U.S. Census Bureau wants to stop asking people in a key national survey about their field of study.

Since 2009 the bureau has collected data on people’s undergraduate fields of study as part of its American Community Survey, at the urging of the National Academy of Sciences and the National Science Foundation. The survey, which is based on responses from more than three million households, is used to collect demographic information and keep track of trends between the decennial censuses.

On this blog, we’ve previously written about how underemployment hit recent graduates and that ever-present question: “Is your college degree still worth it?” Without the field-of-study data from the American Community Survey, that research would have been nearly impossible to compile. ...

The division chief of the American Community Survey Office, Jim Treat, says a cost-benefit analysis was used to make the recommendation that the question be dropped. In an email to The Chronicle, Mr. Treat wrote that his office had looked at the perceived burden of including each question and had surveyed federal agencies to see which data were used.

If the Census Bureau were to drop the question, Mr. Gawalt said, it would not be impossible for the NSF to run its own survey again, but doing so wouldn’t be cheap. Before the Census added the field-of-degree question, he said, the NSF spent an estimated $17-million to compile the information, and the data had less detail than the American Community Survey provides. The NSF’s elimination of its survey resulted in savings of $4-million every other year.

via chronicle.com

This is a good example of a benefit-cost analysis that assigns standing to only a limited group. Since taxpayers are funding the ACS it seems like standing should be assigned to all users of the data and not just federal agencies. 

Here is a (very) recent paper (that I've just printed out and hope to read over the break) that finds an "economics major" wage premium:

Carroll, Thomas, Djeto Assane, and Jared Busker. "Why it Pays to Major in Economics." The Journal of Economic Education 45, no. 3 (2014): 251-261.

Abstract: In this article, the authors use a large, recent, and accessible data set to examine the effect of economics major on individual earnings. They find a significant positive earnings gain for economics majors relative to other majors, and this advantage increases with the level of education. Their findings are consistent with Black, Sanders, and Taylor (2003), documenting that about two-thirds of the bachelor's degree premium for economics majors can be attributed to the type of job economics majors perform, and about one-third is a premium that economics majors earn over other workers within the same job.

 

Quote of the Day: Hey, that sounds familiar!

"If we're using ethanol for environmental benefits, for air quality and climate change, we're going down the wrong path, [Jason Hill, University of Minnesota Engineering Professor] said."

via hosted.ap.org

Using life-cycle assessment and valuation techniques, Matt Winden and I (along with a couple of engineering colleagues) came to a very similar conclusion:

This study monetizes the environmental damage and human health risk externalities associated with the life-cycle production and use of ethanol biofuels from corn-based and cellulosic feedstocks. An integrated economic-environmental assessment framework couples the measured emission impacts from the fuels with individuals' preferences regarding each fuel's externalities. This framework allows the welfare values associated with gasoline and ethanol's externalities to be derived and compared. The results of the study reveal that the production and consumption of corn starch ethanol produce declines in environmental and health outcomes of $1.23 per gallon relative to gasoline for an 85% blend.