Environmental Economics

"An Adjunct’s Farewell"

David J. McCowin:

Administrations, not department chairs, are responsible for making decisions about the pay of adjunct instructors. And for most, it’s not a priority. Surely, though, the marketing brochures you received from colleges and universities did not highlight their cost-cutting methods in staffing classrooms. They’re strangely quiet on this growing issue, which suggests a lack of pride in their own policies.

via chronicle.com

"An Oklahoma Suburb, Tornado-Ready"

Kevin Simmons:

In 1999, 2003 and 2013, powerful tornadoes struck [Moore, OK], killing dozens and causing billions of dollars in damage. The 1999 storm had the highest wind speed ever recorded when it hit the nearby town of Bridge Creek. In all, 36 people died. Twenty-four more were killed in 2013 by another extraordinarily powerful tornado, including seven children at Plaza Towers Elementary School in Moore, one of two schools hit in the town.

But tragedy can breed resolve, and last year, Moore adopted a stricter building code for residential construction, becoming perhaps the first municipality in the country to approve rules aimed at significantly enhancing the structural strength of new homes and making them more tornado-resistant.

The new code raised the wind standard to 135 miles per hour from 90, sufficient to withstand most tornadoes. At the time the rules were proposed, the consulting engineer for the city estimated that construction costs would increase by about $1 per square foot. A group of local builders concurred. That would increase the cost of an average Oklahoma home by $2,000.

Not a bad deal, you might say, considering that an average of 64 tornadoes strike Oklahoma every year, behind only the considerably larger state of Texas, with 149, and Kansas, with 93, according to the federal government’s Storm Prediction Center. ...

Academic research in the 1970s found that in cases of low-probability hazards with serious consequences, most people ignored the likelihood that the hazards could happen to them. This suggested that people would be unwilling to pay for features that would provide protection against tornadoes.

But research I did with Daniel Sutter, an economics professor at Troy University in Alabama, suggests this belief may be wrong. We found that people were willing to pay more for homes with safety rooms, and to rent lots in mobile home parks with community shelters — features that increase the odds of surviving a deadly storm. Following the 1999 tornado in Moore, some builders there began to strengthen their construction voluntarily, and one of them told me the better construction was responsible for about half of the increase in sales of his homes.

The rationale for better construction extends beyond the dynamics of real estate markets. If reduction in damage exceeds the cost of construction, the new code is good policy.

In a new paper published in the journal Weather, Climate, and Society, I, with my co-authors, Paul Kovacs, executive director of the Institute for Catastrophic Loss Reduction, and Greg Kopp, a civil engineering professor at the University of Western Ontario, found that they do.

Oklahoma has suffered by our estimate more than $30 billion in normalized damage from tornadoes over the last 25 years. If that pattern continues, we estimate that Oklahoma can expect $36 billion in future residential damage. Most damage comes from tornadoes rated EF-3 and above, or those with winds speed of at least 136 miles per hour.

The new Moore code is not designed for those winds, but a large tornado does not sustain wind speeds that high for a majority of its path. With this in mind we estimate that the Moore code, applied statewide, could reduce the expected damage from future tornadoes by 30 percent, or $11 billion. If all homes in Oklahoma had been built to the new standard, the increase in cost would have been $3.3 billion. This approach would easily pass a cost-benefit test.

via www.nytimes.com

Hat tip: Facebook

Bravo young man

“We don’t just deny evolution,” [19-year old science activist Zack Koplin] says, “We are denying climate change and vaccines and other mainstream science. I’m calling for a Second Giant Leap to change the perception of science in the world.”

To that end, Kopplin would like to see $1 trillion of new science funding and an end to denialist science legislation. He wants to see the American public become more aware and better educated about science.

“My generation is going to have to face major challenges to our way of living — and the way to overcome them is through rapid scientific advancement,” he says. “But as as of right now, America has a science problem.”

via io9.com

"RFF on the issues: Fracking contamination concerns"

RFF Staff:

An RFF survey of public opinion in Pennsylvania and Texas about shale gas development risks revealed that 41 and 31 percent of respondents, respectively, are “extremely concerned or very concerned” about risks to groundwater and surface water sources. The survey also showed that the public is willing to pay to reduce such risks—on average, $25 to $30 per year per household for every 1,000 fewer drinking water wells with problems.

via common-resources.org

Here is "Figure 2. Willingness to Pay, on Average, for Shale Gas Risk Reductions" from the link in the excerpt:

"Brazil's $900 million World Cup stadium is now being used as a parking lot"

Joseph Stromberg:

Brazil spent about $3 billion building 12 new or heavily refurbished stadiums for last year's World Cup. Officials promised these taxpayer-funded venues would continue to generate revenue for years, hosting concerts, pro soccer games, and other events.

But as Lourdes Garcia-Navarro at NPR reports, most stadiums are failing to generate much revenue at all. The most expensive one, in Brasilia, is most regularly used as a site for a municipal bus parking lot. ...

There are economists who study the potential economic impact of these events on the cities that host them, and their findings are unequivocal: they don't pay. As Victor Matheson, an economist at College of the Holy Cross, told my colleague Brad Plumer, "My basic takeaway for any city considering a bid for the Olympics is to run away like crazy."

via www.vox.com

Hat tip: Donald Coffin on the NAASE Google group. 

Two from Economic Inquiry (July 2015) on gas prices and saving lives

Paul J. Burke and Shuhei Nishitateno: 

This study utilizes data for 144 countries from 1991 to 2010 to present the first international estimates of the gasoline price elasticity of road fatalities. We instrument each country's gasoline price with that country's oil reserves and the yearly international crude oil price to address potential endogeneity concerns. Our findings suggest that the average reduction in road fatalities resulting from a 10% increase in the gasoline pump price is in the order of 3%–6%. Around 35,000 road deaths per year could be avoided by the removal of global fuel subsidies. (JEL R41, H23, O18, Q43)

via onlinelibrary.wiley.com

At a value of statistical life of $9 million (that was the number Kip Viscusi was using a the SBCA meetings in March, removing global fuel subsidies would generate a life saving benefit of $315 billion. 

Damien Sheehan-Connor:

Policies to reduce carbon emissions by vehicles, such as fuel economy standards and gasoline taxes, have impacts on vehicle weight and thus on safety. This paper develops a model that separately identifies the impact of vehicle weight on mortality and selection effects that impact accident propensity. The main results are that (1) the safety externalities associated with heavy vehicles are greater than the environmental ones; (2) under fuel economy standards, vehicle weights have recently decreased with little likely effect on accident deaths; and (3) similar environmental benefits could be combined with substantial reductions in deaths by implementing higher gasoline taxes. (JEL H23, D62)

via onlinelibrary.wiley.com

A higher gas tax would generate substantial life saving benefits too. 

I always wanted to be a "worldwide expert"

And now, humbly, I am:

[Benefit Transfer of Environmental and Resource Values - A Guide for Researchers and Practioners, ed. by Johnston, Rolfe, Rosenberger, & Brouwer, forthcoming 2015] provides a comprehensive review of environmental benefit transfer methods, issues and challenges, covering topics relevant to researchers and practitioners. Early chapters provide accessible introductory materials suitable for non-economists. These chapters also detail how benefit transfer is used within the policy process. Later chapters cover more advanced topics suited to valuation researchers, graduate students and those with similar knowledge of economic and statistical theory and methods. This book provides the most complete coverage of environmental benefit transfer methods available in a single location.

The book targets a wide audience, including undergraduate and graduate students, practitioners in economics and other disciplines looking for a one-stop handbook covering benefit transfer topics and those who wish to apply or evaluate benefit transfer methods. It is designed for those both with and without training in economics

via www.springer.com

Here is my evidence (emphasis added):

• The book will provide a unique, one-stop reference on contemporary benefit transfer methods, debates, applications, challenges and frontiers
• The book will represent the only comprehensive handbook for benefit or value transfer
• With chapters written by worldwide experts, the handbook will provide a broader purview on methods and perspectives than any existing authored or edited volume
• The handbook will be designed for direct relevance among academics, students and practitioners
• The book will be designed to bridge the gap between rigorous transfer methods in the academic literature an those applied by non-academic practitioners

I wrote, with Ash Morgan and Bill Huth, "Benefit Transfers with the Contingent Valuation Method." We received the invitation to write a chapter back in January 2012 and reviews of our first draft in September 2012. This shows how long these projects take. So, congrats to the editors!

I just saw today the final table of contents and the book looks great. It is heavy on stated preference methods and meta-analysis. 

I just ordered my copy of Climate Shock

Read the NYT op-ed, the infamous pop quiz, our Salon feature, or Foreign Affairs and Atlantic essays.

via gwagner.com

A libertarian financial market analogy for climate change policy

... the issues associated with climate change are not that different from the risk issues we deal with in the financial markets every day. We know there’s a risk — we don’t know how big the risk is, we’re not entirely sure about all of the parameters, but we know it’s there. And we know it’s a low-probability, high-impact risk. So what do we do about that in our financial markets? Well, if it’s a nondiversifiable risk, we know that people pay plenty of money to avoid it.

via www.vox.com

It's Smog Season in Central Ohio

The American Lung Association wants the U.S. Environmental Protection Agency to lower the allowable ozone level to 60 parts per billion. That standard has been hotly debated during the past year, as the U.S. EPA has said it plans to reduce allowable ozone in the air to 65 or 70 parts per billion.

Smog warnings now are issued when ozone levels reach 75 parts per billion or higher. Central Ohio's three-day average during the 2014 season, which starts in April and ends in October, was exactly 75 parts per billion, according to the Ohio EPA.

Scientists have said that cutting levels to 60 parts per billion would prevent as many as 12,000 premature deaths, 5,300 nonfatal heart attacks, 58,000 cases of aggravated asthma and 2.5 million missed school and work days each year.

But the Ohio EPA has said that 60 parts per billion is too low.

via www.dispatch.com

I wonder if that last sentence is an economic statement ("the cost of 60 parts per billion outweigh benefits of 60 parts per billion") or a political statement ("screw those flaming lefties at the American Lung Association. They just want to impose regulations on the good citizens of Ohio")?

I suspect the former but fear the latter.