Environmental Economics

Innovations like these help explain why Elsevier is an academic publishing giant

Get your Clean Power Plan comments in today!

Dallas Burtraw, Karen L. Palmer, Anthony Paul, Hang Yin:

Thursday is the deadline for public comment on EPA’s Proposed Federal Plan for the Clean Power Plan. As we have been preparing our own comments for submission (which will be available later this week at www.rff.org/cleanairact), we have also developed a Technical Background document, Approaches to Address Potential CO2 Emissions Leakage to New Sources under the Clean Power Plan, to support others in preparing their comments. We hope you find it useful. ...

Our main findings: 

• A mass policy covering all sources and including the new source complements yields emissions that are less than the options we consider for mass-based approaches that cover only existing sources. 
• Updating allocation is a potent approach to reducing total emissions when new sources are not covered under a mass-based emissions cap. EPA should consider expanding the portion of allowances allocated on an updating basis and the technologies eligible to earn them.
• Designating all affected units (including coal) as eligible to receive updating allocation can be nearly as effective at reducing leakage to uncovered new fossil units as excluding coal from eligibility. This may have a policy or legal advantage in treating all affected sources symmetrically.  In contrast, eligibility for existing non-emitting generators is not an effective leakage remedy.
• Some aspects of the model framework may amplify the leakage we identify. If newly constructed units were expected to be designated as existing units at a future date this would narrow the gap. Effective programmatic energy efficiency also would narrow the gap.

via www.rff.org

In short, expand trading to include all of the energy sector of the economy?

There is little doubt that I'm the most awesome

A different kind of ash-hole problem: Does the distribution of costs matter to economists?

I've written in the past about the Emerald Ash Borer and the problems they cause in Ohio.  This post is about a different kind of ash, coal-ash, and the problems it causes in Ohio (and other states). 

Coal-ash is a by-product of coals fired electricity production.  The ash from burning coal is stored in big lagoon-like ponds called ash-impoundments, or as I like to call them, ash-holes.  Get it?

Beyond the obvious yuck factor and potential standard externality problems associated with leakage and breeches of the lagoons, location of these ash-holes near low-income populations creates concerns over environmental justice. 

A federal civil rights commission is holding a hearing this week about whether coal ash disproportionately affects low-income and minority populations.

Lenore Ostrowsky, a lawyer for the U.S. Commission on Civil Rights, said federal data already show that some of those populations bear the highest burden...

Ohio's coal-ash containment areas are mainly in rural, low-income areas, and most are along the Ohio River...

Economists are often bad at considering the distributional impacts of policies: To the point that we often ignore issues of equity in favor of the more objective measure of efficiency.  If two policies were to result in the same net benefits to society, but different distribution of those benefits within society, the efficiency-oriented economist would have trouble distinguishing between the policies. 

But what if one distribution of benefits (or costs) is socially preferred to another.  Or put a different way, what if society were willing to forego resources (willing to pay?) to ensure a different distribution of benefits (or costs)?  In that case, the distribution of resources might fit withing the realm of the efficieny paradigm as now society can be viewed as better or worse off depending on the distribution of resources.

Of course this raises all kinds of questions about morals, ethics, social welfare, interdependent utility...but it is at least a recognition that the distribution of resources has real and tangible benefits and costs and might be considered within the neoclassical economic framework.

Just a thought.

Call for Papers: AERE Sessions at the SEA Meetings

The SEA 2016 Annual Meeting will be held in Washington, DC at the J.W. Marriott Hotel, Washington, DC, on November 19-21, 2016 (Saturday through Monday). Authors wishing to have a paper considered for the AERE sessions should send a .pdf file by e-mail to:

John Whitehead
Appalachian State University
Email: [email protected]
Subject Line: AERE SEA

Deadline to submit is March 1, 2016. Files should be sent by the proposed presenter who will be the contact for correspondence. The file should contain the following information:

1. Author's (and co-author's) name, address, affiliation, telephone number, and e-mail address.
2. Title of paper.
3. Abstract of no more than 100 words.
4. JEL codes.

Papers submitted without all the required information will not be considered. Electronic acknowledgements of submissions will be sent to all submitters. Proposals for complete sessions are also encouraged. Organizers of proposed sessions should submit abstracts for EACH of the papers following the above instructions. Papers may be accepted or rejected on an individual basis unless the organizer specifically requests the session be considered only in its entirety. Please note that all selected presenters must be 2016 AERE members. AERE membership of presenters will be verified one month after notification of acceptance. Papers of non-members will be dropped from the program. (We regret we do not have sufficient staff to send membership reminders to non-members.) 

 

Call for Papers: AERE Summer Conference

From the inbox:

AERE Summer Conference 2016 Breckenridge, Colorado—Call for Papers due Friday, 1/22, midnight PST.

The 2016 AERE Summer Conference takes place in Breckenridge, Colorado on June 9 – 11, 2016. Due to reorganization of management activities at AERE, the deadline to submit papers has been extended to January 22nd (midnight PST).  Click here for the Call for Papers, click here to access the Submission Guidelines, and click here for additional information about the conference and pre-conference workshop.  Questions should be directed to the organizing committee at [email protected]

Papers can be submitted for the following three categories:

-  Contributed (or General) Sessions;

 - Sponsored Sessions; or

 - Poster Sessions

For the nth straight year I have no plans to attend but am one of 100 or so reviewing the submitted abstracts. 

Loving those automatic journal referee reminders

From the inbox:

On November  5, 2015 I sent you a paper to review for the [journal]: "[paper title]".

When I sent you this paper I requested that you send me your evaluation by January  2, 2016. We have now sent you two reminders, most recently on January 10, 2016 Still, our records indicate that your report has not yet been received. If you have already sent your report and it has not yet been filed, I apologize for disturbing you again.

However if you have not yet sent your review, I would very much appreciate if you could send me your report within the next 7 days.

Let's see ... I'm asked to review right before the SEA meetings and final exams and then, surprise, I miss the deadline after a 2 week holiday. I read half the paper last night. Ugh.

Kim Jong Un's path to redemption (among alcoholics at least)

...perhaps we can learn to love North Korea now that it claims to have invented a revolutionary liquor that won't leave you bleary-eyed and hungover...

"Koryo Liquor, which is made of six-year-old Kaesong Koryo insam, known as being highest in medicinal effect, and the scorched rice, is highly appreciated by experts and lovers as it is suave and causes no hangover," Jong Hwa Sun wrote.

via www.cnn.com

I volunteer John to be the U.S. tester (I will be second)

"Proof That a Price on Carbon Works"

From the New York Times editorial page:

Lawmakers who oppose taking action to lower greenhouse gas emissions by putting a price on carbon often argue that doing so would hurt businesses and consumers. But the energy policies adopted by some American states and Canadian provinces demonstrate that those arguments are simply unfounded.

Around the world, nearly 40 nations, including the 28-member European Union, and many smaller jurisdictions are engaged in some form of carbon pricing. In this hemisphere, British Columbia, Quebec, California and nine Northeastern states have raised the cost of burning fossil fuels without damaging the economy. Alberta, Canada’s biggest oil and gas producer, and Ontario have said they will adopt similar policies.

Carbon pricing comes in two forms: a direct tax on emissions or a cap on emissions. British Columbia, for instance, has levied a tax on emissions from fuels like gasoline, natural gas and heating oil. California and Quebec, which are working together, place a ceiling on overall emissions and allow utilities, manufacturing plants, fuel distributors and others to buy and sell permits that entitle them to emit greenhouse gases. Like the cap itself, the number of permits decline over time, becoming more expensive.

Many economists regard carbon taxes as the simpler and more elegant solution, and cap-and-trade systems like the one that failed in the United States Congress as complex and hard to explain. But both systems effectively raise the price of using fossil fuels, which encourages utilities and other producers to generate more energy from low-carbon sources like solar, wind and nuclear power.

British Columbia, which is home to 4.7 million people, has placed the highest price on emissions in North America, taxing a ton of carbon emitted at 30 Canadian dollars, or about $21. By comparison, emission permits in California and Quebec are trading at about $13 a ton. And permits sold for $7.50 a ton in a December auction in the Northeastern trading system known as the Regional Greenhouse Gas Initiative. That system covers emissions from power plants in nine states that include Connecticut, New York and Massachusetts.

British Columbia started taxing emissions in 2008. One big appeal of its system is that it is essentially revenue-neutral. People pay more for energy (the price of gasoline is up by about 17 cents a gallon) but pay less in personal income and corporate taxes. And low-income and rural residents get special tax credits. The tax has raised about $4.3 billion while other taxes have been cut by about $5 billion. Researchers have found that the tax helped cut emissions but has had no negative impact on the province’s growth rate, which has been about the same or slightly faster than the country as a whole in recent years.

Meanwhile, jurisdictions using the cap-and-trade approach like California, the nine Northeastern states and Quebec are investing the revenue generated by auctioning emission permits in mass transit, energy efficiency, renewable energy and other strategies to reduce carbon emissions. Some of the revenue is also dedicated to helping low-income families cope with higher energy costs.

In Alberta, a new government announced in November that it would impose a tax of 30 Canadian dollars on most greenhouse gas emissions by the start of 2018. The province’s leaders also said they would phase out the use of coal power plants and impose caps on carbon and methane emissions from Alberta’s oil and gas industry.

These actions deserve applause. But their real value may lie in providing a template for the rest of the world. Broad participation is essential to keeping warming below a point of no return; as a practical matter, it is also essential to keep companies from moving their operations to nations that do not impose a cost on carbon emissions.

In that context, China’s announcement last year that it would set up a national cap-and-trade system was hugely encouraging — the world’s largest emitter agreeing to tax itself to help solve a problem that, only a few years ago, it barely acknowledged. Yet Congress has refused to act even as it becomes clear that putting a price on greenhouse gas emissions is the most direct and cost-effective way to address climate change.

via www.nytimes.com

In case you haven't been able to keep up with the oyster markets

Measuring the Impact of the BP Deepwater Horizon Oil Spill on Consumer Behavior

Land Economics February 1, 2016 vol. 92 no. 1 82-95

O. Ashton Morgan, John C. Whitehead, William L. Huth, Greg S. Martin, and Richard Sjolander

Abstract

We exploit the timing of the BP Deepwater Horizon oil spill to develop a unique dataset of oyster consumer actual and anticipated behavior immediately prior to and following the event. A revealed and stated preference model allows both short- and longer-term responses to the spill to be investigated. Findings indicate that the BP spill had a negative impact on oyster demand in terms of short-run actual behavior, although spill effects show signs of dissipating several months following the spill. By accounting for unobserved heterogeneity in the sample, findings further indicate that short- and longer-term spill responses differ across consumer groups. (JEL Q22, Q51)

doi: 10.3368/le.92.1.82

via le.uwpress.org