Environmental Economics

Field research

Climate change conspiracy worthy of a Grisham novel

A Cambridge Professor has made the astonishing claim that three scientists investigating the melting of Arctic ice may have been assassinated within the space of a few months.

Professor Peter Wadhams said he feared being labelled a “looney” over his suspicion that the deaths of the scientists were more than just an ‘extraordinary’ coincidence.

But he insisted the trio could have been murdered and hinted that the oil industry or else sinister government forces might be implicated.

The three scientists he identified - Seymour Laxon and Katherine Giles, both climate change scientists at University College London, and Tim Boyd of the Scottish Association for marine Science - all died within the space of a few months in early 2013.

Professor laxon fell down a flight of stairs at a New year’s Eve party at a house in Essex while Dr Giles died when she was in collision with a lorry when cycling to work in London. Dr Boyd is thought to have been struck by lightning while walking in Scotland.

via www.telegraph.co.uk

Maybe I should start watching my back?

Just in case.

Y'know?

Daily Demand and Supply: Is backyard BBQ a negative externality?

I'm definitely using this one in class when I talk about negative externalities and Coase (Warning: a little NSFW language):

 Here is the Pinellas County, Florida explanation of the nuisance odor law:

Commercial barbecue cookers are not exempt from causing a nuisance odor. If a sufficient number of complaints, representing different households, are reported and an Inspector witnesses the problem, they can issue a Warning Letter.

N' then they get a stern talkin' to.

From a Coasian perspective the answer seems pretty straight forward.  The County has established the property right in favor of the neighbor (no smoke allowed).  A Pareto-improving solution exists.  If the value of the BBQ to the owner is high enough, he should be willing to pay the neighbor to tolerate the nuisance of the odor and smoke.  If the offered payment is high enough to cover the cost of the odor and smoke to the neighbor, then the neighbor should be willing to accept the offer.  If the offered payment is not high enough to cover the cost to the neighbor then the BBQ'er is SOL. 

Whether a deal is struck or not is largely irrelevant, the point is by assigning the property right (in this case to the neighbor) the county has created an opportunity for the market to solve the problem.  Without the property right assignment, this becomes a case of a neighborly dispute with no mechanism for a solution:  "I have the right to BBQ."  "No, I have a right to smell fresh air."  The assignment of property rights creates the mechanism for bargaining to begin.  The final piece is the price that needs to be bargained.

So, I offer the following as a starting point for negotiations:  The BBQ'er should offer the neighbor a plate of BBQ any time he barbecues.   If he wants to sweeten the offer, he might offer all the fixin's to go with it (I'm sure he makes a mean slaw).  If that's not enough, a glass of momma's sweet tea to go along might be the key.

What is it about the Red Sox that drives up the demand for beer?

Source: Deadspin

Daily demand and supply: bee-pocalypse and higher prices for fruits and nuts

This is good news but if we're not living through the great tribulation then I don't know what to say: 

You've heard the news about honeybees. "Beepocalypse," they've called it. Beemageddon. America's honeybees are dying, putting honey production and $15 billion worth of pollinated food crops in jeopardy. ...

The trouble all began in 2006 or so, when beekeepers first began noticing mysterious die-offs. It was soon christened "colony collapse disorder," and has been responsible for the loss of 20 to 40 percent of managed honeybee colonies each winter over the past decade.

The math says that if you lose 30 percent of your bee colonies every year for a few years, you rapidly end up with close to 0 colonies left. But get a load of this data on the number of active bee colonies in the U.S. since 1987. ...

... the number of honeybee colonies has actually risen since 2006, from 2.4 million to 2.7 million in 2014, according to data tracked by the USDA. The 2014 numbers, which came out earlier this year, show that the number of managed colonies -- that is, commercial honey-producing bee colonies managed by human beekeepers -- is now the highest it's been in 20 years.

So if CCD is wiping out close to a third of all honeybee colonies a year, how are their numbers rising? One word: Beekeepers.

A 2012 working paper by Randal R. Tucker and Walter N. Thurman, a pair of agricultural economists, explains that seasonal die-offs have always been a part of beekeeping: they report that before CCD, American beekeepers would typically lose 14 percent of their colonies a year, on average.

So beekeepers have devised two main ways to replenish their stock. The first method involves splitting one healthy colony into two separate colonies: put half the bees into a new beehive, order them a new queen online (retail price: $25 or so), and voila: two healthy hives.

The other method involves simply buying a bunch of bees to replace the ones you lost. You can buy 3 pounds of "packaged" bees, plus a queen, for about $100 or so. ...

The price of some of that extra work will get passed on to the consumer. The average retail price of honey has roughly doubled since 2006, for instance. And Kim Kaplan, a researcher with the USDA, points out that pollination fees -- the amount beekeepers charge to cart their bees around to farms and pollinate fruit and nut trees -- has approximately doubled over the same period.

"It's not the honey bees that are in danger of going extinct," Kaplan wrote in an email, "it is the beekeepers providing pollination services because of the growing economic and management pressures. The alternative is that pollination contracts per colony have to continue to climb to make it economically sustainable for beekeepers to stay in business and provide pollination to the country’s fruit, vegetable, nut and berry crops." We have also been importing more honey from overseas lately.

But rising prices for fruit and nuts hardly constitute the "beepocalypse" that we've all been worried about. Tucker and Thurman, the economists, call this a victory for the free market: "Not only was there not a failure of bee-related markets," they conclude in their paper, "but they adapted quickly and effectively to the changes induced by the appearance of Colony Collapse Disorder."

via www.washingtonpost.com

I though I had missed the rapture but I might still have a chance.

Hat tip: Pearl

Daily demand and supply: CA gasoline prices

From the email:

Sky-High California Gas Prices Have a Green Additive
by: Allysia Finley
Jul 18, 2015
Click here to view the full article on WSJ.com

TOPICS: Environmental Regulation

SUMMARY: The national average is $2.76 a gallon, while Golden State drivers pay $3.88. Eco-virtue is expensive.

CLASSROOM APPLICATION: Students can evaluate whether California's environmental regulation of gasoline and electricity and also gasoline taxes are driving up the state's gasoline prices. They can also discuss whether these regulations and taxes promote economic efficiency (by addressing the negative externality of gasoline).

QUESTIONS: 
1. (Introductory) What is the effect of California's gasoline tax on the price of gasoline in the state?

2. (Advanced) What is the effect of California's regulation of carbon emissions on the price of gasoline in the state? Analyze the regulation of gasoline and the regulation of electricity.

3. (Advanced) Why [are] California gasoline prices compared to those of other states particularly hard hit when refinery disasters occur?

Reviewed By: James Dearden, Lehigh University

Quotes of the day

If they asked me I would say something about benefits and costs, but that's just me:

A new study has found that the global bumblebee population is declining rapidly and entire species of the pollinating insect are dying out, a phenomenon largely attributed to pesticide use and climate change that threatens the world’s food supply. What do you think?

“Ideally, this will be one of those ‘our children and grandchildren’ problems.”

Gabe Winton
Unemployed

 

“There are a ton of bees around the trash can behind the Blumberg Jewish Community Center. Have the scientists looked there?”

Travis Padilla
Key Grip

“Anyone unconvinced by the human toll of climate change will surely be moved by the plight of the bees.”

Ida Suthers
Masonry Inspector

via www.theonion.com

"U.S. Leaves the Markets Out in the Fight Against Carbon Emissions"

Eduardo Porter:

In 1990, by an overwhelming majority, Congress amended the Clean Air Act to establish a market for electric utilities to trade the right to emit sulfur dioxide, one of the main contributors to acid rain.

The law was based on a simple economic insight. If utilities facing high costs to cut emissions could, instead, buy allowances to pollute from those who could cut emissions for less, reducing overall pollution would be much cheaper. The idea had been successfully used before, during the Reagan administration, to reduce lead in gasoline.

It worked again. By 1996, sulfur dioxide emissions had declined by a fifth. A study published a few years later concluded that trading of pollution permits cut the cost almost by half, saving utilities and their customers billions of dollars.

Here’s the not-so-funny punch line: A decade and a half later, when President Obama proposed using “cap and trade” to cut emissions of greenhouse gases — the biggest environmental threat of our time — lawmakers looked back upon this unquestionable success and said “no.”

Members of Congress have changed, of course. Many Republicans who say that climate change is a myth or believe that the Obama administration is engaged in an unnecessary “war on coal” may have been hoping to block any environmental program. What they achieved, however, was to direct the nation’s efforts to combat climate change in a much more expensive direction. ...

“It is a mystery,” said Gilbert E. Metcalf, an economist at Tufts University specializing in energy and the environment, “why the Republican Party drives environmental policy away from using Adam Smith’s invisible hand.”

There is plenty of evidence of the high cost of regulation. Sebastian Rausch, from the Center for Economic Research at ETH University in Zurich, and Valerie J. Karplus from the Massachusetts Institute of Technology have modeled how a cap-and-trade policy would look compared to a variety of regulatory options — including a federal renewable portfolio standard, a clean energy standard, fuel economy standards and the like.

A standards-based policy, which is what we have now, is generally much more inefficient, delivering only one-fourth the emissions reductions of cap and trade for the same cost.

“The politics are making the administration do things in a much more expensive way,” said Michael J. Graetz of Columbia Law School, “than if the Congress had acted to do something about climate change.” ...

As Robert N. Stavins, who heads the Harvard Environmental Economics Program, points out, using regulatory standards to limit greenhouse gas emissions from many millions of households, factories, farms, cars, trucks — all of which face very different costs of abatement — would be an implausibly complex task.

“The only way to do this is to send information through markets,” Professor Stavins said. An economywide carbon price, he argues — as does much of the economics profession, including many Republicans — would give everybody the incentive to reduce emissions at the lowest possible cost.

But little progress has been made. While carbon is often implicitly priced via excise taxes and other taxes on energy, the price tag is almost always too low to encourage substantial reductions in CO2 emissions.

via mobile.nytimes.com

A second correction in the Journal of Economic Perspectives

From Retraction Watch: 

The Journal of Economic Perspectives has published a second correction for a 2009 paper that argued that some amount of global warming could lead to economic gains. ...

After the first correction was published, several people contacted the JEP to point out more issues with the paper. Editors worked with [Richard] Tol and outside researchers to update the paper again. ...

The latest correction probably wouldn’t be the end of the argument. In the final section of the latest correction, the JEP has provided an index of methods and materials in anticipation of further debate:

For a list of studies that were included, what methods were used in these studies, what economic sectors were covered, and the like, we would point interested readers to the “Supplementary Material” table for Chapter 10. The full report, Chapter 10, and the Supplementary Material are all available at http://www.ipcc.ch/report/ar5/wg2/. Controversy over these estimates seems likely to continue. We recommend that readers interested in these questions use the figure and data from the IPCC report as their starting point.

When asked for a statement on the latest correction, Tol offered a brief response.

I am grateful to the editors for their constructive attitude in a painful episode.

Readers may also want to look at the latest assessment here: https://ideas.repec.org/p/sus/susewp/7515.html

The paper has been cited 133 times, according to Thomson Scientific’s Web of Knowledge.

I'm dreading when a painful episode happens to me. 

"On Campus Quads in California, 'Brown Is the New Green'"

Shouldn't the headline be more like green ($) is the new green?

Perhaps it’s a sign of how dire the drought has gotten in California: Water-saving projects long on the drawing board, despite being cheap and easy, are finally coming to campuses. Last month at the University of California at Davis, workers rerouted recycled sewer water to the chiller plant, which supplies air conditioning. The project will save 61 million gallons annually, or almost 10 percent of the campus’s potable-water supply.

The investment? $20,000 in materials and two weeks of staff time.

"We never really did it because our water was relatively inexpensive, so there was never a need to make better use of it," says David Phillips, director of utilities. "The drought was the prompt for us."

via chronicle.com

If the value of a gallon of water is $0.01 (one penny) then the annual benefits are $610 thousand. Let's say the staff is 25 workers making $100 an hour. The cost of two weeks of staff time is then about $200 thousand. And let's assume that rerouting only works for a single year. 

Even with these ridiculous assumptions the net benefits are $390,000 and benefit-cost ratio is almost 3 to 1. 

What sort of inertia causes one to ignore a water-saving project like this one?