Environmental Economics

Friday beer post: time to get your glyphosate on

Just in time to ruin happy hour:

A German environmental group said on Thursday it has found traces of the widely used weed-killer ingredient glyphosate in Germany's 14 most popular beers, a potential blow to the country's reputation for "pure" brewing.

Industry and government immediately sought to play down the report from the Munich Environmental Institute.

The Brauer-Bund beer association said the findings, which were based on a small number of samples, were not credible. Germany's Federal Institute for Risk assessment said the levels did not pose a risk to consumers' health.

"An adult would have to drink around 1,000 liters (264 U.S. gallons) of beer a day to ingest enough quantities to be harmful for health," it said in a statement.

via mobile.reuters.com

For how many days?

E) Please forgive, I'm an idiot

Source: http://www.phdcomics.com/comics.php?f=1854

Nutty fudgekins!

Zuh? Paul Glimcher and Michael A. Livermore in the NY Times:

THE United States government recently announced an $18.7 billion settlement of claims against the oil giant BP in connection with the Deepwater Horizon oil rig explosion in April 2010, which dumped millions of barrels of oil into the Gulf of Mexico. Though some of the settlement funds are to compensate the region for economic harm, most will go to environmental restoration in affected states.

Is BP getting off easy, or being unfairly penalized?

This is not easy to answer. Assigning a monetary value to environmental harm is notoriously tricky. There is, after all, no market for intact ecosystems or endangered species. We don’t reveal how much we value these things in a consumer context, as goods or services for which we will or won’t pay a certain amount. Instead, we value them for their mere existence. And it is not obvious how to put a price tag on that.

In an attempt to do so, economists and policy makers often rely on a technique called “contingent valuation,” which amounts to asking individuals survey questions about their willingness to pay to protect natural resources. The values generated by contingent valuation studies are frequently used to inform public policy and litigation. (If the government had gone to trial with BP, it most likely would have relied on such studies to argue for a large judgment against the company.)

Contingent valuation has always aroused skepticism. Oil companies, unsurprisingly, have criticized the technique. But many economists have also been skeptical, worrying that hypothetical questions posed to ordinary citizens may not really capture their genuine sense of environmental value. Even the Obama administration seems to discount contingent valuation, choosing to exclude data from this technique in 2014 when issuing a new rule to reduce the number of fish killed by power plants.

Do we respond to contingent valuation studies the way we respond to all other known classes of economic decisions? Or do we behave differently when environmental value is involved?

To find out, we conducted a study, just published in the journal PLOS One, that compared, at a neurological level, how people responded in both situations.

In the budding field of neuroeconomics, researchers have found striking similarity in the brain structures responsible for valuation across a host of different kinds of decision making. Our study used functional magnetic resonance imaging to examine activity in the brain’s valuation areas when subjects were asked to value environmental proposals (for example, protection of sea turtles, cleanup of the Gowanus Canal in New York), snack foods (e.g., tortilla chips), consumer goods (e.g., “The Simpsons: Complete Sixth Season” DVD, a Moleskine notebook) and time spent on daily activities (e.g., jogging, doing laundry).

Across all four types of questions, neural activity indicated that participants were paying attention. But when it came to putting values on things, we found differences. Specifically, when people put values on consumer goods, foods and time spent on daily activities, this was correlated with neural signals in the traditional valuation areas of the brain. But when people answered survey questions about the value of environmental proposals, their brain activity was uncorrelated with these areas.

The takeaway was clear: The brain did not respond to contingent valuation studies the way it did to all other known classes of economic behavior.

This means that contingent valuation does not line up with what we know about the neural basis of ordinary economic decision making. However, we do not yet know how it fails to line up. Contingent valuation may overestimate environmental valuation; it may underestimate it; it may overestimate sometimes and underestimate at other times. ...

Here is the PLOS One abstract:

Environmental public goods—including national parks, clean air/water, and ecosystem services—provide substantial benefits on a global scale. These goods have unique characteristics in that they are typically “nonmarket” goods, with values from both use and passive use that accrue to a large number of individuals both in current and future generations. In this study, we test the hypothesis that neural signals in areas correlated with subjective valuations for essentially all other previously studied categories of goods (ventromedial prefrontal cortex and ventral striatum) also correlate with environmental valuations. We use contingent valuation (CV) as our behavioral tool for measuring valuations of environmental public goods. CV is a standard stated preference approach that presents survey respondents with information on an issue and asks questions that help policymakers determine how much citizens are willing to pay for a public good or policy. We scanned human subjects while they viewed environmental proposals, along with three other classes of goods. The presentation of all four classes of goods yielded robust and similar patterns of temporally synchronized brain activation within attentional networks. The activations associated with the traditional classes of goods replicate previous correlations between neural activity in valuation areas and behavioral preferences. In contrast, CV-elicited values for environmental proposals did not correlate with brain activity at either the individual or population level. For a sub-population of participants, CV-elicited values were correlated with activity within the dorsomedial prefrontal cortex, a region associated with cognitive control and shifting decision strategies. The results show that neural activity associated with the subjective valuation of environmental proposals differs profoundly from the neural activity associated with previously examined goods and preference measures.

Khaw, Mel W., Denise A. Grab, Michael A. Livermore, Christian A. Vossler, and Paul W. Glimcher. "The Measurement of Subjective Value and Its Relation to Contingent Valuation and Environmental Public Goods." PloS one10, no. 7 (2015): e0132842.

This is a cromulent study with results (below) that aren't totally surprising. Of course the dorsomedial prefrontal cortex will embiggen with the Simpsons 6th season! So, instead of environmental vs other goods, my experimental design would divide the goods up according to private vs public goods like we explain it in intro micro:

1. Rival, excludable: private good (e.g, pizza)
2. Rival, nonexcludable: common pool resource (e.g., fisheries)
3. Nonrival, excludable: club good (e.g., private park)
4. Nonrival, nonexcludable: public good (e.g, air quality, national defense)

Use of the crayola oblongata method applied in the sophistimacated doowhackey would beginulate a craptacular advance in the CVM knowledgeum. Anything less would be a traumedy.

 

An estimate of how much federal wind and solar tax credits matter

Via the inbox:

The renewable energy tax credits Congress extended in December will lead to higher deployment of wind and solar power and reduce emissions from the energy sector, federal researchers announced on Monday. 

The tax credit extensions will lead to a net peak increase of 48 to 53 gigawatts of renewable energy generation by the early 2020s, according to a study from the National Renewable Energy Laboratory (NREL). The credits mean renewable energy will be deployed at a noticeably higher rate than if lawmakers allowed them to expire, the report found.

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Because of expanded renewable energy deployment, the study found, carbon dioxide emissions from the power sector are set to decrease by between 540 million metric tons and 1,400 million metric tons between 2016 and 2030. 

Both figures — renewable energy deployment and carbon emission reductions — are contingent on the price of natural gas. If prices remain at their current low levels, NREL projects, utilities are likely to move more slowly to embrace wind and solar power. ...

Lawmakers extended the tax credits for solar and wind power for five years as part of the tax and spending deal they reached in December. Extending the credits was a trade-off for lifting the federal ban on crude oil exports. 

via thehill.com

Here is a link to the study: http://www.nrel.gov/news/press/2016/22645. 

There will be negative economic effects if the government burns carbon tax revenue

From the inbox:

Thought you would get a kick out of the rather significant government finance "limitation" expressed on this poster I saw at a recent professional meeting.  I'm sure that had a little to do with the dramatic impacts predicted for GSP and employment.

The poster was analyzing the effect of a $15/ton carbon tax on Indiana's economy.

Source: HH

TMZ has photographic proof that "sea level [is] rising at fastest rate in 2,700 years"

Not really:

The global sea level likely rose faster last century than it has in at least 2,700 years, researchers concluded in a study out this week. 

The research concluded “with 95 percent probability” that the 14 centimeter rise observed during the 20th century is greater than in any century since at least 800 B.C.,” Rutgers University climate scientist Bob Kopp wrote on his website. 

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The study tied the sea level rise to increasing temperatures brought about by climate change. Assuming the 20th century had seen temperatures no higher than the average of the previous 1,300 years, there is a 95 percent chance the sea level rise would have been half what it actually was, the study found. 

via thehill.com

Insert biased conclusion here [title and snark inspired from the comments].

John Kasich wants to create more jobs (for people like me at least)

From The Kasich Action Plan:

John Kasich will call on Congress to make cost-benefit analyses mandatory for all new regulations to make sure their benefit outweighs their costs.

I agree. 

And so does President Obama...

As stated in that Executive Order and to the extent permitted by law, each agency must, among other things:  (1) propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs (recognizing that some benefits and costs are difficult to quantify); (2) tailor its regulations to impose the least burden on society, consistent with obtaining regulatory objectives, taking into account, among other things, and to the extent practicable, the costs of cumulative regulations; (3) select, in choosing among alternative regulatory approaches, those approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity); (4) to the extent feasible, specify performance objectives, rather than specifying the behavior or manner of compliance that regulated entities must adopt; and (5) identify and assess available alternatives to direct regulation, including providing economic incentives to encourage the desired behavior, such as user fees or marketable permits, or providing information upon which choices can be made by the public.

...who extended President Bush's Executive Order 13258 which slightly amended President Clinton's Executive Order 12866...

Federal agencies should promulgate only such regulations as are required by law, are necessary to interpret the law, or are made necessary by compelling public need, such as material failures of private markets to protect or improve the health and safety of the public, the environment, or the well-being of the American people. In deciding whether and how to regulate, agencies should assess all costs and benefits of available regulatory alternatives, including the alternative of not regulating. Costs and benefits shall be understood to include both quantifiable measures (to the fullest extent that these can be usefully estimated) and qualitative measures of costs and benefits that are difficult to quantify, but nevertheless essential to consider.

...which reaffirmed President Reagan's Executive Order 12291 which stated:

In promulgating new regulations, reviewing existing regulations, and developing legislative proposals concerning regulation, all agencies, to the extent permitted by law, shall adhere to the following requirements:
(a) Administrative decisions shall be based on adequate information concerning the need for and consequences of proposed government action;
(b) Regulatory action shall not be undertaken unless the potential benefits to society for the regulation outweigh the potential costs to society;
(c) Regulatory objectives shall be chosen to maximize the net benefits to society;
(d) Among alternative approaches to any given regulatory objective, the alternative involving the least net cost to society shall be chosen; and
(e) Agencies shall set regulatory priorities with the aim of maximizing the aggregate net benefits to society, taking into account the condition of the particular industries affected by regulations, the condition of the national economy, and other regulatory actions contemplated for the future.

 

The deadline for AERE abstracts at the SEA meetings is the day after Leap Day

Here is the call for papers.

Internet meme courtesy of PEC

I wish I was 25 years younger

This is the least important reason:

It's a good time to have a new Ph.D. in economics and be seeking a job in academe. Or outside of academe.

A new report by the American Economic Association found that its listings for jobs for economics Ph.D.s increased by 8.5 percent in 2015, to 3,309. Academic jobs increased to 2,458, from 2,290. Nonacademic jobs increased to 846 from 761. (Not all jobs are classified in the two categories.) Economics is a field in which new doctorate recipients have long been recruited not only by colleges and universities, but by government agencies, consulting firms, banks and other organizations.

The association's annual jobs report is released in advance of the group's annual meeting, which opens Sunday in San Francisco.

Not all positions in economics are listed with the association. But the AEA study is generally considered a reliable indicator of the state of the job market, even beyond its own listings.

What may be most significant for the discipline is that the growth in open positions far exceeds the levels of 2008, when the most recent economic downturn hit. Many disciplines have been considering it a success to get back to 2008 levels.

Economics, like most disciplines, took a hit after 2008. Between then and 2010, the number of listings fell to 2,285 from 2,914. But this year's 3,309 is greater not only than the 2008 level, but of every year from 2001 on. The number of open positions also far exceeds the number of new Ph.D.s awarded in economics.

As has been the case in recent years, the top specialization in job listings is mathematical and quantitative methods.

That area was followed by (all regularly among the top five): financial economics, microeconomics, macroeconomics and international economics.

Source: Inside Higher Ed

"Seas Are Rising at Fastest Rate in Last 28 Centuries"

FYI, 28 centuries is 2800 (28 x 100) years:

The worsening of tidal flooding in American coastal communities is largely a consequence of greenhouse gases from human activity, and the problem will grow far worse in coming decades, scientists reported Monday.

Those emissions, primarily from the burning of fossil fuels, are causing the ocean to rise at the fastest rate since at least the founding of ancient Rome, the scientists said. They added that in the absence of human emissions, the ocean surface would be rising less rapidly and might even be falling.

The increasingly routine tidal flooding is making life miserable in places like Miami Beach; Charleston, S.C.; and Norfolk, Va., even on sunny days.

Though these types of floods often produce only a foot or two of standing saltwater, they are straining life in many towns by killing lawns and trees, blocking neighborhood streets and clogging storm drains, polluting supplies of freshwater and sometimes stranding entire island communities for hours by overtopping the roads that tie them to the mainland.

Such events are just an early harbinger of the coming damage, the new research suggests. ...

In the second study, scientists reconstructed the level of the sea over time and confirmed that it is most likely rising faster than at any point in 28 centuries, with the rate of increase growing sharply over the past century — largely, they found, because of the warming that scientists have said is almost certainly caused by human emissions.

They also confirmed previous forecasts that if emissions were to continue at a high rate over the next few decades, the ocean could rise as much as three or four feet by 2100. ...

“I think we can definitely be confident that sea-level rise is going to continue to accelerate if there’s further warming, which inevitably there will be,” said Stefan Rahmstorf, a professor of ocean physics at the Potsdam Institute for Climate Impact Research, in Germany, and co-author of one of the papers, published online Monday by an American journal, Proceedings of the National Academy of Sciences. ...

via www.nytimes.com

As a sidenote, this:

The rise in the sea level contributes only in a limited degree to the huge, disastrous storm surges accompanying hurricanes like Katrina and Sandy. Proportionally, it has a bigger effect on the nuisance floods that can accompany what are known as king tides.

I remember testifying before the NC something or other on climate change, discussing benefit transfer methods that could be used to estimate the cost of climate changes. At one point, my friend from the ECU days (and co-author) Stan Riggs got frustrated and started waving some rolled up papers and exclaiming that I was ignoring Hurricane Katrina. I said, "no I'm not." But, it appears we both should have ignored Katrina. 

And, here are a few oldie-but-goodie posts on sea-level rise politics in North Carolina:

• May 21, 2014, More on sea-level rise politics in North Carolina

• June 22, 2012, An economist on NC sea-level rise follies

• June 18, 2012, And don't call me Shirley

• March 11, 2008, My contribution to the NCAEP Newsletter

In short, North Carolina politicians are ignoring the scientific evidence (surprise!).