Environmental Economics

Quote of the Day: It's that time of the year

From a student comment on an upper level benefit/cost analysis class:

I know it is an economics class, but it is environmental and natural resource economics so you would expect to talk about other things that are important other than money. 

 

Field Research: Water Conservation in California

Spending a few days visiting family in Southern California.  Went to Catalina Island for the day today.  First I took a quick tour of the island.

 

Then I observed the extent of the water shortage on the island:

 

 

Finally I observed the economic solution to the water shortage. 

 

They charged $0.50 for water at lunch.

 

So I ordered beer.

Will this field of dreams create a self fulfilling prophesy?

Matt Kahn:

At the end of the day, will the COP 21 achieve a game change by shifting expectations and signalling to the world that the "green economy" is coming and this field of dreams creates a self fulfilling prophesy?  Or, did progressives need a week of feeling strong and hopeful before returning to the real world challenge of a world in which billions of people need energy services to live their version of the American Dream and the suburbanized United States is unwilling to vote for pricing carbon because our lifestyle would become more costly to continue?  

via greeneconomics.blogspot.com

Overheard at COP21:

John Kerry: So what do you want?

Rob Stavins: I want them to stop looking to me for answers, begging me to speak again, write again, be a leader. I want them to start thinking for themselves. I want my privacy.

John Kerry: No, I mean, what do you WANT? [Gestures to the concession stand they're in front of]

Rob Stavins: Oh. Dog and a beer.

Kerry and Stavins are the only two guys I know who were at COP21. 

"How Much Will the Paris Climate Deal Cost the U.S.?"

Real Time Economics (i.e., WSJ):

Now that officials from the U.S. and nearly 200 other countries have reached a deal in Paris meant to keep global warming at bay, many citizens back home want to know—how much will it cost us?

No one knows for sure, but one estimate from an environmental think tank in Washington pegs the cost as a $170 billion hit to U.S. gross domestic product in 2030, or about 0.7% of the total economic output that year. ...

The idea behind the Paris talks is that all countries have to participate in a United Nations-organized effort to curb emissions of greenhouse gases linked to global warming. To get everyone on board, each country was allowed to develop its own plan, and countries aren’t compelled to meet their targets, which cover the period after 2020.

Few political leaders are interested in ordering up deep, painful cuts to emissions in ways that could unleash high electricity prices, stunt industrial growth or prevent impoverished citizens from clawing their way into the middle class.

So most countries, under pressure from peers as well as domestic critics, settled on cuts likely to cause small to moderate economic pain in the medium term, with the potential for big benefits in the longer term if all the major economies comply and humankind keeps the effects of climate change at bay.

The U.S. pledge is built around President Barack Obama’s “clean power plan,” which focuses on steep reductions in carbon dioxide emissions from the electricity sector—mainly coal. The U.S. government estimates the impact of the power rule—issued by the Environmental Protection Agency—at between $28 billion and $39 billion in 2030, or 0.1% to 0.2% of projected GDP.

If the power-plant rule survives court challenges, it could weigh on coal-related jobs, but the U.S. Energy Information Administration’s economic model finds no appreciable effect on overall employment.

Besides the power-plant rules, the U.S. pledge in the Paris accord relies on regulations mandating more-efficient automobiles and trucks, plus other efforts to stem greenhouse-gas emissions.

In May, the World Resources Institute constructed an economic model that shows the effect of the overall target that the U.S. submitted in Paris, although without the final details of how it’s achieved.

That projection resulted in the $170 billion hit to GDP in 2030, not considering the potential gains from better public health or an improved climate. ...

via blogs.wsj.com

I haven't been able to find a cost estimate from a non-environmental think thank.

My top 10 albums of 2015

Based on revealed preference:

1. Jason Isbell - Something More than Free
2. Revivalists - Men Amongst Mountains
3. Allison Moorer - Down to Believing
4. Rhett Miller - The Traveler
5. Steve Earle and the Dukes - Terraplane
6. My Morning Jacket - The Waterfall
7. Dwight Yoakam - Second Hand Heart
8. Kacey Chambers - Bittersweet
9. Drive-By Truckers - It's Great to Be Alive!
10. Patty Griffin - Servant of Love

What did I miss?

I had tickets but missed the Jason Isbell show in Boone, choosing instead to watch my kid in a soccer tournament just an hour away (I didn't choose the dad life, the dad life chose me). To make up for that I attended the Revivalists show in New Orleans with Lynne Lewis the night before the Southern meetings. I've been listening to Men Amongst Mountains ever since. And it is the only album my kids will listen to with me (and they are now to the point where it is all they want to listen to in the car). 

Sadly, this might be the last year for my top 10 list, in this form. One of my New Year's Resolutions is to wean myself off CDs (don't laugh) and I'm not sure if people actually listen to albums on Spotify, or whatever.

 

Daily Demand and Supply: A sociologist discovers economics

Higher taxes on cigarettes and laws banning public smoking both induce people to give up the habit, but bans work better, according to a study led by an Ohio State University sociology professor.

Researchers found the strongest deterrent in places with both a ban and relatively high cigarette taxes, according to the study released on Monday. But in places with only one or the other, the anti-smoking effect was about twice as strong in places with a ban.

Mike Vuolo, an assistant professor of sociology at Ohio State who led the study, said another important finding is that bans have their greatest effect on casual, or social, smokers — offering the opportunity to turn them into nonsmokers before they become addicted.

Bans apparently don’t have as strong a deterrent effect on heavy smokers, defined as those who smoke a pack or more per day. Conversely, the study showed high cigarette taxes are more of a deterrent to heavy smokers than to social ones.

via www.dispatch.com

Economists are Punny?

Just got the table of contents for the latest American Economic Journal: Applied Economics and two of the titles struck me:

Star Wars: The Empirics Strike Back

Kwacha Gonna Do? Experimental Evidence about Labor Supply in Rural Malawi

Come on gang, we can do better than that*.

*Did you hear about the newborn identical twins, Amal and Juan?  If you've seen Juan, you've seen Amal.

A small win for the economics profession

The fact that the NY Times gave a nod towards adjusting for inflation before they declared Star Wars the winner is huge:

In an astounding display of cultural and commercial domination on a global scale — one with little precedent in the history of Hollywood — the Walt Disney Company’s “Star Wars: The Force Awakens” earned roughly $517 million in worldwide ticket sales, smashing multiple box office records, even after accounting for inflation.

It was the largest opening weekend in North America, with $238 million in ticket sales. To put that figure into perspective, consider that “Avatar” (2009), which analysts consider to be the highest-grossing film in history, with $3.1 billion in global ticket sales, took in $85 million over its first three days in domestic release; the previous record-holder for a December opening was “The Hobbit: An Unexpected Journey” (2012) with $87.5 million.

via www.nytimes.com

However, it is not clear from the second paragraph if these are real dollars. We can only declare victory when the currency number has a parenthetical. For example, "...with $238 (2015 dollars) million in ticket sales."

The AEA should take leadership in the profession and encourage more communication among researchers in terms of comments, replies and replication

Andrew Gelman provides Douglas Campbell the space to describe how difficult it is to publish a contradictory replication in economics ("...it took us seven submissions and four years to publish our results in a minor journal."):

And [Douglas Campbell] concludes with some general comments about replication:

Academic economics dearly needs replication studies to become sexy. There are encouraging signs. Thomas Herndon became famous after catching Reinhart and Rogoff’s excel error. There is a new economics replication wiki, and there will be a panel on replication at the AEA meetings. Some journals, such as the AER, require data to be made available online. (Personally, I believe doing empirical research without posting your data online, at least after publication, should be taboo.) Yet, in a field where building close personal relationships is still easily the best path toward publishing and tenure, more needs to be done. One proposal is for someone to calculate new journal rankings which penalize journals which either do not accept comments on the papers they publish, or rarely publish such comments. It would also be helpful if editors, particularly at leading journals, which have substantial market power, would do more to encourage replication. One proposal is that if the QJE or AER wants to encourage comment papers without hurting their own citation ranking, they could start additional journals focused on replication.

I agree. And this reminded me that American Economic Association is conducting a survey. From the AEA Ad hoc Committee on Journals:

The AEA Executive Committee has appointed an ad hoc committee to review a variety of issues related to journals run by the Association. Some of the items being investigated include the mix of journals, refereeing policies, and data sharing rules. The Committee has crafted a survey that takes no more than 10 minutes to complete and we would greatly appreciate it if you would take the survey ...

I took it and here are my answers to the last couple of questions:

That last comment reads:

The AEA should take leadership in the profession and encourage more communication among researchers in terms of comments, replies and replication. This new journal would be an ideal outlet for this communication.

Environmental economics in the December 2015 American Economic Review: The Housing Market Impacts of Shale Gas Development

I was able to download the article from home so the "complimentary" link below might be a holiday gift from the American Economic Association (or, are all of the AER articles free these days?):

Muehlenbachs, Lucija, Elisheba Spiller, and Christopher Timmins. 2015. "The Housing Market Impacts of Shale Gas Development." American Economic Review, 105(12): 3633-59.

Abstract

Using data from Pennsylvania and an array of empirical techniques to control for confounding factors, we recover hedonic estimates of property value impacts from nearby shale gas development that vary with water source, well productivity, and visibility. Results indicate large negative impacts on nearby groundwater-dependent homes, while piped-water-dependent homes exhibit smaller positive impacts, suggesting benefits from lease payments. Results have implications for the debate over regulation of shale gas development. (JEL L71, Q35, Q53, R31)

Full-text Article (Complimentary)

This is going into my stack of articles that I want to read but probably won't (at least closely).